Alcoa Corporation has confirmed it will cease production at its Kwinana refinery this year, as it grapples with a series of challenges at its oldest WA processing operation.
Alcoa Corporation has confirmed it will cease production at its Kwinana refinery this year, as it grapples with a series of challenges at its oldest processing operation in Western Australia.
In an announcement to market this morning, Perth-based chief operations officer and executive vice-president Matt Reed said the decision was based on a range of factors.
Mr Reed cited age, scale, operating costs and current bauxite grades, as well as market conditions, as reasons for what Alcoa has labelled a curtailment.
“Today’s curtailment decision comes only after thorough and careful deliberation, and we acknowledge that this action will impact workers, business partners, and the community,” Mr Reed said.
“We deeply appreciate the commitment and support of our many loyal employees, contractors, and suppliers at our Kwinana refinery, which has made a major contribution to WA’s economic development over the last sixty years of continual operation.”
Workforce at the project will be scaled back from around 1,200 staff and contractors to around 50 running care and maintenance by 2025.
The shutdown will be phased, with a workforce reduced to 250 in the third quarter of this year (when production will cease).
Mr Reed said the company would work with its employees to provide support in transitioning to other employment opportunities.
"This includes potential redeployment within our business or assistance to facilitate employment at other workplaces," he said.
The refinery's port facilities will continue to import raw materials and export alumina produced at the company's Pinjarra refinery. Material from Alcoa's Wagerup refinery will continue to be exported through Bunbury.
Alcoa said there would be no expected impact to production at Pinjarra or the Wagerup facilities, and that the company remained committed to WA.
The Kwinana operation recorded a net loss of around $US130 million last year, and the company expects the move will save it around $US70 million beginning in Q3. A $US40 million incurrment will be incurred from non-cash depreciation, depletion and amortisation expenses while curtailed.
Today's announcement follows rampant speculation that a closure was imminent at Kwinana.
Alcoa's Australian joint venture partner, Alumina Limited, entered a trading halt this morning pending an announcement from its US partner.
Emerging from the halt, its chief executive, Mike Ferraro, said the company fully supported its JV partner's decision.
"The curtailment decision comes only after thorough and careful deliberation," he said.
"While we acknowledge the potential impacts on workers and other stakeholders, Alumina Limited fully supports the decision by Alcoa in response to losses incurred at the Kwinana refinery together with its age, scale, operating costs and current bauxite grades."
Alumina owns 40 per cent of the joint venture Alcoa World Alumina and Chemicals joint venture business, which operates in Australia.
The Kwinana alumina refinery is the oldest and smallest of Alcoa’s three processing operations in WA.
It has been plagued by inefficiencies in recent years as the company treats lower-grade bauxite ore from its Darling Range mine, while Alcoa seeks environmental approval on future plans for its mining activities in the jarrah forest region.
Chorus of disappointment
Premier and Member for Kwinana Roger Cook labelled the decision disappointing in a statement released shortly following the announcement.
"Today will be a difficult day for workers in my local community of Kwinana," Mr Cook said.
"This is a very disappointing outcome and Alcoa needs to do everything it can to support the workforce through this transition."
He said the government would provide support for local workers to retrain, reskill and seek new career opportunities in the local area, offering the support of the Rockingham Jobs and Skills Centre to work with impacted staff and a dedicated team on standby at South Metropolitan TAFE to provide free career and training advice.
He also defended Kwinana's status as the city's industrial hub.
"Kwinana is the industrial heart of Perth, and has a bright future with new job-creating industrial projects emerging on the strip - keeping Kwinana strong for generations to come," Mr Cook said.
A number of projects, including the state's Westport development, are planned for the Kwinana area in the years to come.
Resources and Northern Australia Minister and Member for Brand, Madeleine King, also weighed in on the closure, which takes place within her federal electorate.
“We understand that Alcoa is faced with difficult considerations, including the age of the facility, a constrained location and challenging market conditions, however, the closure of such a longstanding operation is disheartening for everyone involved," she said.
“Kwinana has been home to the alumina refinery for sixty years and has been a significant part of the local community."
Ms King vowed to hold Alcoa accountable for supporting affected workers.
So did Australian Manufacturing Workers Union state secretary Steve McCartney, who said the company needed to clarify its exact plans for the closure to support its workforce at Kwinana.
“This now raises myriad questions from workers on the exact timing of the shutdown, entitlements for workers and skill support for transition” Mr McCartney said.
“Job losses are never a good thing, but when they happen the least a company can do is keep their workers informed and ensure they stick to their agreed entitlements.
“Our members are already navigating a cost-of-living crisis and now must deal with the uncertainty of their job coming to an end without any transition plan; such as training for future work in new industry.”
One solution for displaced workers was pitched in a joint release by the Property Council of Australia's WA division and the Housing Industry Association, which highlighted the transferrable skill synergies between the refinery's work and the housing sector.
“The skills and experience these workers have are highly sought after by the property and construction industries, which can offer diverse, exciting careers and a strong pipeline of work,” interim Property Council WA executive director Emily Young said.
“From electricians and welders to boilermakers and industrial painters, there are thousands of jobs currently on offer in Perth’s property and construction industries.”
HIA WA executive director Michael McGowan estimated 1000 extra workers could help to deliver as many as 1000 extra houses in the state each year.
While Kwinana will stop production, Ms King said Australia's sovereign capability in alumina production would not be impacted as long as the Wagerup and Pinjarra refineries remained open.
“I have been assured by Alcoa that the curtailment of production at the Kwinana refinery will not affect the broader supply chain of alumina, which is essential for our future transition towards net zero emissions," she said.
“The Australian government has classified high purity alumina as a critical mineral and aluminium as a strategic material.”
