As the Australian dollar continues to hold firm against the USD, ominous signs for our manufacturing industry continue to appear. With rising electricity prices, a looming carbon tax and the dollar seeming quite steady around 1.07, Australian manufacturing is struggling to remain sustainable on the world stage.
In a news cross last week, Ross Greenwood quoted that the Alcoa plant in Port Henry accounts for around 17% of the total energy consumption in Victoria. Due to the fact that around 20%-30% of the cost of producing Aluminium is made up of electricity consumption, Aluminium plants are set up in areas where cheap power has been available, so as these costs increase, the profitability and sustainability of the plant decreases.
Please find the following articles for your perusal;
**** Alcoa reviewing future of Australian aluminium smelter ****
SYDNEY, Feb 8 (Reuters) – Alcoa Australia said it was reviewing the future of its 190,000 tonne Point Henry aluminium smelter as tough global economic conditions have rendered the operation unprofitable. Alcoa said the aluminium industry had been severely impacted by difficult macro economic conditions, with the higher Australian dollar placing increasing pressure on the market.
**** Aluminum Over Copper for Cables ****
RBS 9 Feb . Copper has climbed to almost four times the price of aluminum, a record ratio that’s accelerating a switch by manufacturers to using the cheaper metal in electric cables and wires, a United Co. Rusal (486) executive said. Demand for copper is shrinking by about 400,000 tons a year through substitution, or 2 percent of global use, according to Oleg Mukhamedshin, deputy chief executive officer of Rusal, the world’s largest aluminum producer, who cited market data the company uses in its forecasts. “More than half of this loss is to aluminum,” Mukhamedshin said in an interview in Moscow. “With copper prices at a record, further substitution is expected.”