Alcoa Corporation has announced new agreements with multiple power generators for the Portland Aluminium Smelter in Victoria, meaning Alcoa will keep the smelter operating until 2026. The five-year agreements with AGL, Alinta Energy and Origin will commence on 1 August 2021.
The Australian Government has committed, subject to approval, to provide up to A$19.2 million per year for four years to underwrite the smelter’s participation in the Reliability and Emergency Reserve Trader (RERT) scheme.
The arrangement will recognise the smelter’s ability to rapidly shed load when required to help protect the power grid from unexpected interruptions when it is under duress.
In addition, in recognition of the valuable contribution Portland Aluminium makes to the Victorian economy, the Victorian Government has agreed in principle to a funding package to match the Federal Government contribution.
Alcoa President and CEO, Roy Harvey, said he recognises everyone’s cooperation and dedication in reaching the energy agreements that help to improve the smelter’s competitiveness.
“We look forward to finalising the Australian and Victorian government agreements, which underscore the smelter’s importance to the economy and the vital role it plays in securing Victoria’s electricity grid,” Mr Harvey said.
As a stable baseload energy consumer, the smelter will continue to provide important market stability as more renewables enter the system.
Currently, more than 30 per cent of the smelter’s consumed electricity is derived from renewable sources, including electricity from a nearby wind farm. This figure is expected to grow with the implementation of the Victorian Renewable Energy Target that aims to reach 50 per cent renewables by 2030.
President of Alcoa Australia, Michael Gollschewski, said that after a year characterised by uncertainty, they are delighted to have clarity on the smelter’s power supply. The continuing operation of the smelter is expected to protect around 500 jobs and many others in the region that rely on the plant’s continued operation. The smelter accounts for 14 per cent of jobs in the Portland area.
“I thank our employees and contractors for their continued dedication and commitment to teamwork and operational excellence. Their work is integral to today’s announcement, which is a fantastic outcome for them, their families and the Portland community,” Mr Gollschewski said.
The financial terms of the energy agreements are confidential and are conditioned upon a number of matters, including the finalisation of the government agreements.
Portland Aluminium is an unincorporated joint venture between Alcoa of Australia Limited (55 per cent), CITIC Nominees Pty Ltd (22.5 per cent), and Marubeni Aluminium Australia Pty Ltd (22.5 per cent). Alcoa of Australia Limited is owned by Alcoa Corporation (60 per cent) and Alumina Limited (40 per cent).
Current production is approximately 85 per cent of the smelter’s total nameplate capacity of 358,000 metric tonnes per year.