Major Western Australian alumina producer Alcoa has welcomed a $2 billion federal production credit package for aluminium smelters, highlighting flow-on effects for local operations.
Major Western Australian alumina producer Alcoa has welcomed a $2 billion federal production credit package for aluminium smelters, highlighting flow-on effects for local operations.
The Australian arm of Alcoa mines bauxite and produces alumina from it in WA, shipping that alumina to the Portland smelter in Victoria where it is turned to aluminium.
The company was boosted by news this morning that a green aluminium production credit would be introduced in Australia, encouraging smelters to switch to renewables by 2036.
The credit will be payable from 2028-29, for a period of up to 10 years, and the government hopes it will give local producers an incentive to invest in Australia.
It comes against a backdrop of rising prices for raw material bauxite, and in a challenging regulatory environment for local miners – particularly Alcoa, which has been made to re-visit previously mined areas on the Darling Range.
Environmental scrutiny has been a recurring challenge for Alcoa in the area and resulted in lower grade output for its refineries in WA.
Today’s announcement of a renewably charged tax credit for the Victorian smelter is welcome, a spokesperson told Business News.
“The policy represents a significant step towards securing the future of Australia’s aluminium industry that will help it remain competitive in a global market where other governments are supporting their industries as they work to decarbonise,” the spokesperson said.
“It specially addresses two key issues facing aluminium smelters in Australia – rising energy costs and the significant investment required to decarbonise.
“Alcoa is one of the nation’s few fully integrated resources sector companies with our operations encompassing every step in the primary aluminium production value chain – bauxite mining, alumina refining and aluminium smelting.”
The spokesperson said Portland’s electricity was derived from 40 per cent renewables, including a nearby wind farm.
“We look forward to participating in the government’s continued consultation on the credit and work to decarbonise the industry,” they said.
The federal announcement of a tax credit for aluminium producers came a day after an editorial by Energy Minister Chris Bowen in the Australian Financial Review, which claimed the industry would be wiped out by the Coalition’s plans to roll out nuclear as an energy source.
That claim was pushed again today, by assistant minister for Future Made in Australia Tim Ayres.
“This package guarantees good blue-collar jobs in the Hunter, Central Queensland, Northern Tasmania, Western Australia and Victoria,” he said.
“We know that Peter Dutton’s risky nuclear reactor plan requires the closure of Australian electricity-intensive manufacturing like aluminium refining.”
Mr Albanese said the proposed tax credit capitalised an opportunity to grow on expertise already developed in Australia under the nation’s Future Made in Australia initiative.
Rio Tinto operates two of Australia’s four aluminium smelters – Bell Bay in Tasmania and Boyne Island in Queensland – with CSR and Hydro Aluminum running the Tomago smelter in New South Wales and Alcoa running Portland.
Rio also welcomed the support in a statement published today.
Today’s news was similarly embraced by the Chamber of Minerals and Energy of WA, as a first step which it hopes will be replicated across commodities with more local benefit.
“We hope this announcement is the first of more to come, specifically supporting the development of other green materials in WA, such as green iron and green alumina,” CMEWA acting chief executive Adrienne LaBombard said.
The proposed stimulus was announced on the same day as Alcoa’s fellow WA bauxite producer South32 released its quarterly figures.
South32’s quarterly highlighted the uptick in value received for the alumina mined at the Worsley mine in WA, which climbed 36 per cent to US$512 per tonne in the first half of the current financial year from $US$376 per tonne in the second half of FY24.
South32 does not produce Aluminium in Australia, shipping around 60 per cent of it to its smelters in South Africa and Mozambique and selling the remainder into the seabourne market.
Civil unrest disrupted the Mozal aluminium operation in Mozambique in the latter half of the year to December 31, 2024.
Elsewhere, Perth headquartered South32’s manganese business was revealed to have claimed close to $400 million from insurers for damage to the Groot Elyandt manganese mine.
The project, which is owned 60 per cent by South32 and 40 per cent by Anglo American, was ravaged by a cyclone in March last year.
The project returned to production in the December quarter but work to remediate the site is ongoing.
