Carbon tax “not a factor” in Point Henry closure: Alcoa

The carbon tax has not been given by Alcoa as a reason it chose to close down its Point Henry aluminium smelter.

The carbon
tax has not been given by Alcoa as a reason it chose to close down its Point
Henry aluminium smelter, contradicting claims from the federal government.

The
50-year-old smelter, which has been under strategic review by the company since
February 2012, will close in August, shedding 500 jobs. Almost 500 jobs will be
lost elsewhere as the company closes two of its rolling mills.

Fairfax reports that both federal treasurer Joe Hockey and industry minister Ian
Macfarlane blamed the former Gillard government’s carbon tax following the
news.

”The carbon tax adds to the cost of
production. It does, no matter what people say. You cannot say the carbon tax
helps with producing things in Australia,” said the treasurer.

”At the end of the day, the carbon tax
is a greater cost on business. It is a massive cost on aluminium smelters,
obviously. A 50-year-old smelter with a carbon tax is never going to be
cost-effective.”

Alcoa
explained that, ”the carbon tax was
not a factor in the decision.”

An announcement on the company’s website explained that, “A comprehensive review found that the 50-year-old smelter has no prospect of becoming financially viable.

“The two rolling mills serve the domestic and Asian can sheet
markets which have been impacted by excess capacity.”

The Australian Financial Review notes that the smelter is much less productive than to the company’s newer Portland operation, which employs 380 (compared to 500) and produced 358,000 tonnes of aluminium a year (compared to 190,000). The future of the Portland site, however, is also the subject of concern.

The Australian Industry Group’s Innes Willox said yesterday
that the decision to close Point Henry showed the huge pressures facing Australian manufacturing in
general and metal producers in particular.

“Two factors stand out as critical to Alcoa’s decision,” he
said.

“Since 2008 global production volumes of primary aluminium
have grown by a third (up 33% from Dec 2008 to Dec 2013); and over the same
period Chinese production of primary aluminium has more than doubled (up 125.3%
from Dec 2008 to Dec 2013).

“In this globally competitive environment, the strong dollar
and the rise in energy costs have had a profound impact on Alcoa, as well as
other metal manufacturers.

 

Image: Fairfax