Article by Perry Williams, courtesy of The Australian
01.05.2025
Alcoa says keeping its Portland aluminium smelter in Victoria open beyond 2035 will hinge on securing a competitively priced electricity deal, while dismissing green hydrogen as a potential energy source for its Australian operations.
The smelter was threatened with closure twice over the past decade, with the federal and state governments tipping in funds to help the facility recover from a power outage followed by a $155m subsidy deal also shared between governments.
Portland then locked in a nine-year deal with AGL Energy securing the smelter operations out to mid-2035 and Alcoa chief executive Bill Oplinger said any extension would require competitive contract terms for its energy supplies.
“It’s around cost. We’ve got power contracts through 2035 and as we approach 2035 we will have to work through whether we can get sustainable, low-cost energy again at that point,” Mr Oplinger told the Melbourne Mining Club.
“I’m always hopeful. I always want to keep our plants operating and there’s a lot of time for things to change.”
Alcoa has previously said about 40 per cent of the smelter’s electricity comes from renewable sources, such as the nearby Portland wind farm, and it also has a memorandum of understanding in place with the onshore Kentbruck Green Power Hub and another with Alinta Energy to collaborate on the proposed Spinifex offshore wind farm.
The smelter produces about 18 per cent of the nation’s aluminium and has the capacity to provide grid stability, an important feature when supplies in the nation’s electricity system are strained.
The Alcoa boss said he was open to nuclear as a back-up fuel source for its operations, while noting cost concerns.
“I think nuclear in the mix of energy sources makes a lot of sense, and I think that it will take time to build out, sometimes, depending on the regulatory situation. It could be expensive, but I do think as a firming source nuclear makes sense.”
Still, the metals chief was dismissive of the potential of green hydrogen, hyped by many developers as a significant energy source to help the economy hit net zero goals.
“I’m not focused on it. I haven’t found that hydrogen is anywhere close to being economic enough to do anything with. We are heavy natural gas users in Western Australia. We’re looking at other sustainable sources of energy, but hydrogen for us is not there,” Mr Oplinger said.