The carbon tax has not been given by Alcoa as a reason it chose to close down its Point Henry aluminium smelter, contradicting claims from the federal government.
The 50-year-old smelter, which has been under strategic review by the company since February 2012, will close in August, shedding 500 jobs. Almost 500 jobs will be lost elsewhere as the company closes two of its rolling mills.
Fairfax reports that both federal treasurer Joe Hockey and industry minister Ian Macfarlane blamed the former Gillard government’s carbon tax following the news.
''The carbon tax adds to the cost of production. It does, no matter what people say. You cannot say the carbon tax helps with producing things in Australia,'' said the treasurer.
''At the end of the day, the carbon tax is a greater cost on business. It is a massive cost on aluminium smelters, obviously. A 50-year-old smelter with a carbon tax is never going to be cost-effective.''
Alcoa explained that, ''the carbon tax was not a factor in the decision.''
An announcement on the company’s website explained that, “A comprehensive review found that the 50-year-old smelter has no prospect of becoming financially viable.
“The two rolling mills serve the domestic and Asian can sheet markets which have been impacted by excess capacity.”
The Australian Financial Review notes that the smelter is much less productive than to the company's newer Portland operation, which employs 380 (compared to 500) and produced 358,000 tonnes of aluminium a year (compared to 190,000). The future of the Portland site, however, is also the subject of concern.
The Australian Industry Group’s Innes Willox said yesterday that the decision to close Point Henry showed the huge pressures facing Australian manufacturing in general and metal producers in particular.
“Two factors stand out as critical to Alcoa's decision,” he said.
“Since 2008 global production volumes of primary aluminium have grown by a third (up 33% from Dec 2008 to Dec 2013); and over the same period Chinese production of primary aluminium has more than doubled (up 125.3% from Dec 2008 to Dec 2013).
“In this globally competitive environment, the strong dollar and the rise in energy costs have had a profound impact on Alcoa, as well as other metal manufacturers.