Rising power costs threaten aluminium industry

Posted October 08, 2012 07:21:52

The Australian Aluminium Council has warned that the Kurri smelter in the NSW Hunter Valley will not be the only one at risk, if the industry is forced to absorb more electricity costs.

It has told a Senate Inquiry into electricity costs that aluminium smelting already carries a disproportionate share of transmission costs, compared to other users.

Hydro's Kurri smelter was recently forced to close because of the high Australian dollar and low world metal prices.

Aluminium Council Executive Director Miles Prosser says Kurri will not be the only casualty if transmission costs rise.

"We're not saying that the current costs for transmission need to change but we're just saying to the regulators and to the Government, look if you're going to play around with this policy just be conscious that you can't load more costs on to users like aluminium," he said.

"There just isn't the capacity there to continue to take on more costs."

The Council has told the Inquiry that smelting is a loss-making industry and its long term viability is in question.

Mr Prosser says to make matters worse the industry is forced to carry a disproportionate share of transmission costs.

"The smelter takes a very consistent load of electricity and so it's actually quite a simple task to build a transmission line between the generator and the smelter," he said.

"The transmission task when it comes to distributing electricity to households and other users is a bigger task and so what we're actually seeing is aluminium smelters probably taking more than their normal amount of the transmission cost if you like."

Topics: manufacturing, electricity-energy-and-utilities, federal-government, kurri-kurri-2327, tomago-2322