Smelter closure good for Australia

When Alcoa's Point Henry workers met the Prime Minister Julia Gillard on Monday they should have advised her to call the aluminium company's bluff and dismiss its blatant rent seeking tactics.

Just over 12 months ago, the company's majority owner, Alcoa Inc of the US, declared the Australian operations were the jewel in the crown of all its regional plants.

In its annual review of global activities, Alcoa Inc wrote: "Alcoa of Australia ended 2010 in excellent shape, maintaining its place as one of the most profitable Alcoa regions and a critical element in the global Alcoa system. This came despite significant challenges, including uncertainty over carbon price legislation and a resources tax, energy security issues, rising production costs, and currency impacts."

A little over a year later, it beggars belief that one of Alcoa's plants is in financial distress and likely to close down, leaving 600 employees jobless.

Given that only one the "challenges" listed above has changed drastically – and that is that Alcoa now has certainty that it will be cushioned from the worst of the carbon tax – serious questions of rent seeking must be posed by the Federal Government.

Further, Opposition leader Tony Abbott needs to, in his own words, "move on" from blaming the proposed carbon price for every manufacturer's decision to cut Australian jobs.

Bewilderingly, his climate change spokesman Greg Hunt repeated criticism of the carbon price again on Monday even though Alcoa has publicly and consistently distanced the review of its Geelong operations from the imminent carbon tax.

Head of Alcoa in Australia Alan Cransberg is on the record, thus: "It (is) important to note that the review has not been prompted by a future price on carbon. The present situation is a result of low metal prices, a high Australian dollar, and input costs. The future price on carbon would be an additional cost, however Point Henry smelter is already losing money.''

Alcoa could have elaborated by explaining that in many countries where there already is a price on carbon that aluminium sectors are in fact thriving.

Germany, for instance, is building smelters not axing them because the nation's industrialists understand that demand for aluminium is set to grow and grow, especially as limits on carbon emissions are tightened further.

According to the German aluminium industry association, GDA, aluminium is processed in 600 plants in Germany and in 2009 the sector employed 73,000 people directly.

Now Germany's manufacturers have for years factored into their operating costs a price on carbon - in the form of emissions trading and feed-in-tariffs that require electricity generators to purchase renewable energy.