"The arrangements announced today to save Alcoa's Portland aluminium smelter from closure will bring near-term relief, but long-term reform needs to follow for durable prosperity," said Innes Willox, Chief Executive of national employer organisation Ai Group today.
"The deals with the Federal Government, the Victorian Government, and several energy businesses to extend the life of the Portland smelter by five years will ease the fears of businesses and workers not just in Portland, but in supply chains that extend across the State and beyond.
"There is never a good time for a major industrial closure. But with Australia's recovery from the pandemic recession still taking root this would be the worst of times.
"The pandemic has also brought greater consciousness of the need for economic resilience, including both trusted international supply chains and the capacity to make core products within Australia. A functional industrial base has a value well beyond its share of GDP. Losing more of our aluminium output would not only have consequences for exports, but also for the security of supply chains for many other products.
"Aluminium is important to our economy and way of life. But so are steel, glass, bricks and many other energy-intensive materials and products. The challenges facing Portland are not unique: ageing facilities, fading of the old coal and gas advantage and relatively high emissions make it hard to attract investment in a market awash with competitors.
"The five years' breathing space this deal buys can't be wasted.
"Power prices are down for now as cheap renewables boom, but prices could easily sawtooth from slump to surge if the accelerating closures of old coal generators aren't managed well. Gas prices are rebounding from last year's lows, and alternatives like hydrogen will need much more deployment to become affordable. Upgrading and expanding industry to become low, zero, or negative-emissions needs ambitious and investment-grade policy.
"If we don't solve these problems, government rescues will not be able to hold back the tide of closures.
"Governments, regulators and industry need to redouble our efforts to build a new energy advantage for a net zero emissions world. Reforming our energy markets and getting our climate policies right can secure not just the survival of our energy intensive industries, but strong, secure and sustainable growth," Mr Willox said.
