Smelter closure good for Australia

As one of the world's biggest reliers on renewable energy and with the most ambitious emissions target among advanced countries (100 per cent reliance on renewable energy by 2050), German industry is hardly staring at bankruptcy.

It has just recorded its lowest unemployment rate in 20 years, its economy is still growing, it is shouldering the biggest responsibility for bailing out Europe's failing economies and it is snatching Australian defence vehicle contracts out of the hands of local manufacturers in Bendigo, to boot.

Alcoa's citing of the rising cost of input materials sounds disingenuous when it is considered that one of those inputs, electricity, is being supplied to the Point Henry smelter for next to nicks.

The smelter gobbles up nearly a quarter of the state's energy at a price heavily subsidised by all Victorians.

For electricity, it uses the Anglesea coal mine and power station, which Alcoa operates, and for another of the input materials, bauxite, it can access that from one of its own mines in Western Australia.

One admission you will not hear Alcoa cite is that it has allowed a 30-year-old plant that has benefitted from more than $4 billion worth of taxpayer funded energy subsidies to become rundown.

The smelter may be out of date and inefficient, but that is because insufficient capital has been invested in it to make it competitive with the rest of the world's newer and state-of-the-art smelters.

Calls for the Point Henry operations to be propped up even further with more Victorian taxpayer subsidies must not be heeded by Premier Ted Baillieu unless he can extract a commitment from Alcoa Inc that it will spend to make the plant as efficient as its overseas competitors.

Last month, (January) Alcoa Inc declared a dividend of nearly $1 a share. With 1.06 billion shares on its books, the aluminium giant will be paying out about $US1 billion to its shareholders this year (2012).

In its latest financial update Alcoa Inc revealed that it had collected revenue of $25 billion from all its global operations for the year, which was 19 per cent more than in 2010, that it had close to $2 billion in cash on hand and that it was forecasting 7 per cent growth in global aluminum demand and a global aluminum supply deficit in this year.

This is hardly the picture of a struggling corporation, but rather a glimpse into one that unduly rewards shareholders while refusing to invest in operations that are not super-profitable.

But how much profit is enough for the parent company? In 2011 Alcoa Inc said the Australian operation was "in excellent shape, maintaining its place as one of the most profitable Alcoa regions".