If the Portland smelter in Australia is to stay open past 2021, it must have a deal on reliable power that is cheaper than the agreement now in place. Such was the message conveyed by partners Alcoa Corporation and Alumina Ltd. last week.
Alumina Ltd. Chief Executive Mike Ferraro told reporters at a mining conference in Melbourne that any agreement entered into by his firm must include a caveat allowing them veto power should a decision be made to shutter the plant. However, he said any decision to close the plant was premature.
“We would ideally like to find a solution,” Ferraro explained to the assembled reporters.
“It’s well run, it’s a relatively new smelter,” he continued. “Ideally, we would like to renegotiate a new power contract at a lower price.”
Portland’s current power contract lapses in the middle of 2021. The plant consumes about a tenth of the electricity generated in the state.
At present the plant is powered via electricity generated in coal-fired power plants, making it a relatively large carbon emitter compared to other Alcoa operations.
The Portland plant was saved from closure two years ago after the Australian government threw it a A$230 million life line and a favorable power arrangement. The plant faced significant challenges prior to state intervention due to a power blackout and resulting damage from solidified aluminium in its pots.
Though the plant’s power supply is steadier than before, uninterrupted power to the operation is still elusive. Last month the plant was forced to endure eight hours of spotty power, and it is compensated for using less power during heat waves.
The Portland smelter has been rumored to be on the chopping block since Alcoa said in October that it is planning to modify or sell 1.5 million metric tons per annum of smelting capacity through 2024 in a bid to become the world’s lowest per-ton emitter of carbon in the realm of aluminium producers.
The Portland plant is a joint venture among Alcoa’s Alcoa World Alumina and Chemical, Alumina Ltd., CITIC, and Marubeni Corp.