Pacific Aluminium refinery gets lifeline, pipeline

NT chief minister Terry Mills announced yesterday that the troubled Gove refinery, owned by Pacific Aluminium, will stay open, saving 1,500 local jobs.

Mills’s announcement was made on Twitter and then detailed in parliament yesterday.

"Today's decision has secured the future of Gove and will allow its community to look-ahead with certainty," said the chief minister in an announcement.

"This is the beginning of new opportunities for the NT with more than 700 new jobs to be created and significant injection into our economy."

Analysts have said that Rio Tinto, the parent company of Pacific, is losing an estimated $30 million per month by keeping Gove open. The plant employs roughly 1,500 people, and its closure would be hugely damaging for Nhulunbuy, population approximately 4,000. 

"Pacific Aluminium will now work closely with the Northern Territory government to put all final agreements and approvals in place to secure the gas supply," said Pacific.

Crucial to keeping the refinery open is the conversion of its operations from heavy diesel to gas as a fuel source. Pacific has said it would only consider this if it was guaranteed access to ten years’ worth of gas.

The NT government granted that access yesterday, setting aside a portion of what it is provided from its 25-year contract with Eni, signed in 2005. This will be made available to Gove at approximately $6 per gigajoule.

Piping gas from Katherine to Nhulunbuy will require a 600 km pipeline to be built, at a cost of over a $1 billion, reports The Age.

Rio Tinto’s CEO Sam Walsh said that everyone was a winner with yesterday’s decision.

"Gas to Gove is not only important for the refinery and the community of Nhulunbuy, it is important to the entire Northern Territory,” he said, in comments reported by The Australian.

“This project will double the size of the domestic gas market, drive further investment in gas exploration, increase long-term gas supply, attract new industries and create jobs for Territorians."