Hazelwood shutdown dangerous for Portland smelter

Image: Joe Armao/AFR

The Portland aluminium smelter would be at a heightened risk of closure if the Hazelwood power station shut, an outcome which may be decided next month.

The Sydney Morning Herald reports that the majority owner of the brown coal-powered Hazelwood station, France’s Engie, may decide to close the plant, which could cause price shocks.

An estimated fifth of the state’s electricity comes from Hazelwood, and the smelter uses an estimated eight to ten per cent of all the state’s electricity.

Citi analysts said that the Portland smelter, which is only marginally profitable, would face a real risk of closure if power prices went up.

“If Portland closes we expect Hazelwood to also close, but 2-3 years later, meaning electricity prices would weaken in the short term. This is due to a desire for Engie to reduce their carbon emissions globally, and as Hazelwood closing is the only logical way for Victoria to meet its 40 per cent renewables target by 2025,’’ The Australian records them as saying.

Portland will become exposed to spot prices when a Victorian government-subsidised contract comes to an end on October 31.

The smelter employs about 750 employees and contractors, with an estimated 2,000 indirect jobs attached to it.