“Energy sustainability is an important and growing challenge for Australian business and our success in this will impact on our ability to sustain and grow Alcoa’s operations, and to compete in global markets.”

Managing Director Alan Cransberg outlined the future business risks associated with what he termed an ‘energy constrained world’ in his address to the Australian Institute of Company Directors held on 10 July in Perth.

Focusing on energy sustainability and highlighting how WA has been experiencing a serious gas shortage in recent years, where supply has failed to meet growing demand, Mr Cransberg said reducing energy use and improving efficiency were vital for Alcoa.

“Given the business and environmental case, energy is a major focus for our business,” he said.

“Energy is a key business cost, particularly for the aluminium industry where it accounts for almost 24 per cent of the cost of making alumina.

“As such we monitor energy use as part of our daily, weekly and monthly management plans and we require all our locations to undergo a stringent self-assessment process to identify gaps in performance.”

Mr Cransberg said engaging employees to assist in identifying areas where energy efficiency levels could be improved was also integral to Alcoa’s future sustainability.

He outlined the company’s Employee Suggestion Scheme which encourages and rewards employees for their improvement ideas.

“For example, operators at our Kwinana refinery power house identified major improvements that delivered over $1 million in energy savings.

“Needless to say they received a significant bonus for their efforts,” he added.

During his address to the Melbourne-based audience, Mr Cransberg highlighted the need for a national energy security strategy to ensure Australia’s energy future for the next 50 to100 years.

He outlined how a 2050 vision should embrace economic importance, the social benefits to communities and households of energy supply and environmental concerns.

“We need long term strategies to promote competition and diversity of supply and this means having a broad mix of different fuel sources and suppliers,” he said.

“As current events demonstrate, we also need a strategic energy reserve such as that maintained by the United States and China, which would need to be underpinned by a reservation policy to ensure the needs of local industry and households are met.”

Continuous advances in technology were also vital to Alcoa’s energy strategy and with six smelters in Australia, compared to over 80 in China, Mr Cransberg was clear that Australia’s technological advances would have the ability to lead improvements on a global basis.

The Australian Institute of Company Directors - July 10