News State Victoria PM, Victorian government announce deal to keep Alcoa’s Portland smelter open

PM, Victorian government announce deal to keep Alcoa’s Portland smelter open

The smelter provides direct and indirect jobs to one quarter of Portland's population. Photo: ABC
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Victoria’s struggling Alcoa aluminium smelter will stay open with a deal worth about $230 million from the state and federal governments.

The four-year deal includes about $200 million from Victoria and $30 million from Canberra to restart operations, which have been hampered since a power fault damaged equipment.

Energy provider AGL also announced a new four year agreement to supply electricity to Alcoa, which was set to be affected by the upcoming closure of the Hazelwood coal-fired power plant.

Prime Minister Malcolm Turnbull said the deal would allow repairs on the plant to start immediately.

“That is our commitment – to ensure that you can get back on your feet and get going again, creating great export dollars, defending 700 jobs here, and over 2000 in the region,” Mr Turnbull told workers in Portland on Friday.

Treasurer Tim Pallas told ABC 774 the state government’s contribution was worth about $50 million a year over four years.

A power outage on December 1 damaged equipment and left Alcoa operating at just 30 per cent capacity, putting the smelter at further risk of closure. Alcoa chief executive Roy Harvey thanked the state and federal governments for their “unwavering support”.

“Today’s government and energy agreements will help make the Portland smelter more resilient against market volatility, maintain hundreds of jobs and provide a bridge to a potential long-term energy solution,” Mr Harvey said in a statement.

Alcoa will immediately begin work to restart smelting capacity that was lost due to the power fault, with the process expected to take about six months. Before the electrical fault the smelter had been operating at nearly 85 per cent of its capacity of 385,000 metric tonnes per year.

Under the federal deal, the smelter must produce at least 270,000 tonnes a year and aim to hit 300,000 tonnes until June 2021.

If the smelter closes before 2021, Alcoa will have to repay some of the money back to the federal government. Mr Pallas said he would have liked Canberra to chip in more money.

“We would’ve liked a larger contribution from the federal government, but it has worked hand in hand with us and this is a good outcome for the people of Victoria,” he told ABC 774.

Negotiations to keep the smelter open have been going on for months, with state and federal ministers flying to Alcoa’s New York headquarters to plead with the owners to keep it open. Last year workers agreed to a one-year pay freeze to allow for conditions to stabilise.

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