Australia should set aside enough gas for use by local industries because it would benefit the economy more than by just exporting it, says the local head of Alcoa.
Australia should have a thriving aluminium smelting industry providing jobs and income, but was instead missing out by selling bauxite and alumina offshore where others produced it, said Alcoa of Australia managing director Alan Cransberg at a business lunch.
Global giant Alcoa is the world’s largest aluminium company, through production of bauxite, alumina and aluminium.
An argument is growing in Australia between high energy users worried about soaring prices wiping out margins and petroleum companies developing massive suite of liquefied natural gas projects around Australia wanting to the best return on the hundreds of billions of dollars being spent.
Western Australia’s government has set aside 15 per cent of gas for domestic use but the eastern states have not.
We’re a clever country, we’ve got labour, we’ve got infrastructure, we’ve got energy, we’ve got bauxite, we’ve got alumina refining and technology, Mr Cransberg told reporters.
“I sincerely worry, not only as someone who works in this industry but as an Australian, if we just continue to rely on having a mining industry and nothing else, although I know we are not totally reliant.
“Are you happy being a quarry for the rest of the world?
“The solution was to diversify the economy, encourage businesses with natural advantages such as aluminium producers – Australia is the world’s largest bauxite miner and second-largest alumina refiner – and improve declining productivity,” he said.
The thing we don’t have is long term affordable energy, he said.
Alcoa recently invested in a $10 billion joint venture in Saudi Arabia because it was receiving government backing for the whole supply chain from mining to smelting, he said.
It has also invested $100 million to $200 million in three separate LNG projects in WA to secure some energy supply, which Alcoa had done reluctantly.
Mr Cransberg said the business would re-assess its troubled Victorian Point Henry smelter – one of the state’s biggest energy users – in 2014 after it was saved by multi-million-dollar government handouts earlier this year.
