October 19, 2009

Alcoa’s Victoria Operations Energy Contracts

As Victoria’s largest exporter and employer of some 1,600 people, Alcoa of Australia has naturally had a close working relationship with the State’s governments.  Together we have developed State infrastructure, created jobs and exports and developed local communities. Through progressive and innovative technology, we operate two of the world’s most efficient aluminium smelters that produce the most sustainable metal of our time.

Alcoa’s energy contracts with the Victorian Government were put in place for both Point Henry smelter and Portland Aluminium when the latter was given the green light in the 1980s.  Under the contracts, the power tariff paid by Alcoa is linked to the world aluminium price.  This allowed the Victorian Government and Alcoa to share the financial risk in building Portland Aluminium, and in so doing, guaranteed the energy base load for the State’s new Loy Yang power station. This enabled greater grid capacity and a surety around low cost energy over the years for all Victorians.

Alcoa injects approximately $900 million into the State’s economy annually, through employment, infrastructure and capital developments, community partnerships and local State taxes. Every year Alcoa contributes almost $1 billion to Federal, State and Local government revenues.  Alcoa has also been a major contributor to the infrastructure of Victoria since it started operations in 1961, both through Loy Yang and the construction of the high voltage line from Geelong to Portland, connecting South Australia to the Victorian grid, that enabled South Australians to access a more stable and reliable power supply.

While the current economic climate sees our business facing significant challenges, with the support of our employees and communities we look forward to a bright future, operating world class aluminium smelters in Victoria.

We will continue to nurture open relationships with our governments on matters impacting both parties, including the introduction of the Carbon Pollution Reduction Scheme.  Our position on the CPRS will not change – Australia needs a scheme that ensures the international competitiveness of our industry, protect tens of thousands of jobs, and makes good sense for reducing global emissions.

Alcoa in Victoria – the Facts
• Alcoa is Victoria’s largest exporter contributing $1.6 billion in exports a year.  We account for around 8% of Victoria’s goods exports or 5% of its total exports. 
• Alcoa employs 1,600 people at its aluminium smelting and rolling operations in Victoria, and supports a significantly higher number of employees through its local contractors and suppliers.
• Also Alcoa annually injects approximately $900 million into the State’s economy through employment, infrastructure and capital developments, community partnerships and local and state taxes. Every year Alcoa contributes almost $1 billion to Federal, State and Local government revenues.
• Alcoa’s operations in Victoria and NSW are a critical part of Australia’s value-added aluminium industry producing 30% of the country’s aluminium.
• Alcoa has been a major contributor to the infrastructure of Victoria since it started operations in 1961:
   o Alcoa’s aluminium smelters in Victoria provided the necessary base load demand to support the development of the Loy Yang power generation complex.
   o The Portland Aluminium smelter was the catalyst for the construction of a high voltage line from Geelong to Portland, thus providing an interstate interconnector between Victoria and South Australia.
   o Connecting South Australia to the Victorian grid has enabled South Australians to access a more stable and reliable power supply.
• Alcoa is fully integrated with our communities, supporting local and regional businesses for short and long term purchases; running extensive apprentice training programs and traineeships; working to ensure growth projects deliver benefits to local businesses and communities; and spending over $6million (nationally) to build long-term community partnerships which have and continue to build stronger and more inclusive communities in which to live and work.