Victorian power subsidy for Portland aluminium smelter ends today

Image: The Australian

A long-running subsidised electricity contract for the Portland aluminium plant comes to an end today, creating further difficulties for the already under pressure Alcoa plant.

The ABC’s AM reported this morning that the contract cost the state over $100 million on some years. About 750 full-time and contract workers are employed at the site, with over 2,000 jobs indirectly linked to its operation.

“The original deal, as often is the case with these subsidies, tried to kickstart an industry that was seen to create economic benefit for Victoria,” said the Grattan Institute’s Tpny Wood, speaking of the late-1980s origins of the power subsidy. It originally applied to Portland and the Point Henry aluminium smelter, which shut in 2014.

“Unfortunately, the history of these sort of subsidies is they don’t just create an injection of short-term funding which then can be stopped — they tend to be a permanent drip-line. And that’s what has happened in this case,” he added.

The end of the contract today – linked to the global price of aluminium – puts further pressure on the site, which is reportedly only marginally profitable.

The exposure to a volatile energy market is made more difficult still by the questions over the Hazelwood power plant’s future, majority owned by France’s Engie and which produces an estimated quarter of the state’s electricity.

 

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