Portland in the news

An Australian newspaper has run a story suggesting that the Alcoa Portland smelter is under threat of closure.

The Melbourne Age says that the smelter will lose A$40 million this year, and faces a huge spike in electricity costs at the end of the year. According to the paper, Portland’s power contract is due to expire at year end, with some people predicting the cost increase will add another A$50 million to operating costs.

The smelter, which was built in 1986, is presently running a little under maximum capacity. According to the newspaper, Portland has 540 workers, with another 2000 jobs in support and satellite industries in the town.

One of the problems facing the Portland smelter is that its power comes from brown coal, one of the dirtiest fuels. Alcoa has already closed its Point Henry smelter about 4 hours away from the Portland site. Alcoa has been trimming capacity in the light of low metal prices.

Spokespeople at the key players - Portland management and the power company - did not comment on negotiations. Politicians and lobby groups did, as you can read in the newspaper story.

The split of Alcoa into two companies is due later this year. The upstream company will be looking to keep the plant open if possible. Their primary negotiating point is that the loss of the smelter will cost the power company millions in lost revenue, and cost the local government in lost tax revenue, not to mention the impact on the economy of the loss of so many jobs. But a government bail out is hardly a great solution. The Australian government gave Alcoa a subsidy to keep the Point Henry smelter open 2 years. Once the subsidy stopped, so did the plant.

Here’s a link to the article.