Guest essay by Eric Worrall
Glencore and other major players in Australia’s mining and heavy industry sectors are threatening to shut mines and factories, and divert all investment elsewhere, unless Aussie energy prices fall back to internationally competitive levels.
Manufacturers warn of more Glencore type decisions
Australia will be denied new investment and will watch more of its refineries and smelters close unless the price and security of energy can be resolved, business leaders warn.
Speaking after Glencore warned it may shut its Mt Isa copper smelter and its Townsville copper refinery within a year, big manufacturers like BASF and the Tomago aluminium smelter respectively warned there was limited chance of new investment in Australia and that further job cuts were likely.
Tomago chief executive Matt Howell, who runs Australia’s largest aluminium smelter, said the company was considering cutting production due to “ridiculously high” wholesale electricity prices which would result in job losses.
“It is under active consideration,” Mr Howell told The Australian Financial Review. “We’ve been quite clear with the government that if the wholesale prices do not come down we will have to reduce our load, exactly the same as [Rio Tinto’s] Boyne smelter in Gladstone had to reduce load which means shedding jobs and contractors which we don’t want to do.”
“The prices are still way too high. They should be coming down by half or more than that,” he said. “We should be an energy super power with the cheapest and most reliable electricity in the world. We’re not seeing that now.”
A mining and heavy industry walkout would be catastrophic for the Australian economy. While mining only comprises 7% of GDP, it is widely acknowledged to be a significant source of economic growth, as well as a provider of famously well paid jobs for blue collar workers.
Mining is also a major source of export earnings used by the Australian government to service Australia’s small but rapidly growing government debt.
Electricity prices have skyrocketed in Australia in recent years, thanks to ideologically motivated roadblocks to Australian domestic gas exploration, regulatory hostility towards the Aussie coal power industry, and government attempts to favour the use of unreliable renewable energy over stable baseload fossil fuel sources.