Australia’s largest aluminum smelter needs subsidies in order to afford subsidized electricity.
From 2021:
From this week:
Jerome Dozol, who took over as chief executive in July, said the energy price on offer was too high for the Tomago smelter near Newcastle to keep running without government assistance.
DB2
When I was young bauxite from Jamaica was shipped to British Columbia, Canada, where hydro power was abundant.
The Captain
Montana had a Dam that ran a whole aluminum smelter plant, until Exon came knocking on their door, and told them they could make more money selling the electricity to California than making aluminum. So the plant had to go and Exon received the electricity. Ahhhh the good old days when Exon was still able to sell electricity for a pretty penny.
In my neck of the woods, pure (green) electricity is 25-30% higher than the standard mix (whatever that is). Margins for CO2 free aluminum are running about 15%, FYI.
Australia has abundant solar energy resources that can be harnessed for cheap electricity. Burning coal and natural gas for power results in high electricity costs and lots of pollution.
Coal = 47%
Natural gas = 18%
Solar = 15%
Wind = 11%
Well, Tomago was all on board but the problem came with the “cheap” part.
DB2
The problem came with the lack of enough wind/solar energy and the repairs needed for old unreliable coal fired power plants.
The production credits would see aluminium producers paid for every tonne of “green aluminium” they make…$2 billion would be set aside to pay aluminium smelters a yet-to-be-determined amount per tonne produced using renewable electricity before 2036.
Aluminium smelters are extremely energy-intensive, requiring massive volumes of electricity to operate. Tomago Aluminium is the country’s largest single user of electricity, and electricity makes up about 40 per cent of the smelter’s costs.
Making “green” aluminium would require smelters like Tomago to use only renewable energy in the aluminium-production process.
DB2
Or that company could recycle aluminum in a remelter and save 95% of the energy costs. The energy to run it could even come from green energy. 1/20th as much.
Tomago does have recycling agreements. At the same time global demand grows by over three million tonnes a year. Australia is a major source of bauxite and aluminum (aluminium?) most of which is exported.
DB2
It will take a balance. That balance should, necessarily be tilted heavily toward recycling. That doesn’t help a nation that exports far more minerals than it uses.
It is estimated that 75% of all aluminum manufactured is still in circulation. The leaves a gap of 25% plus the growth of an additional three million tonnes each year.
To help meet that global gap, Australia exports both the bauxite ore and finished metal. India, for example, has been strongly increasing its production of aluminum.
DB2
I’ve been told that renewables are the cheapest energy source. However…
The planned shift to firmed solar and wind power would double electricity costs compared to its current coal-based contract, raising concerns for the future of over 1,000 workers.
Rio Tinto, which owns 51% of Tomago alongside CSR and Hydro Aluminium, confirmed that a decision on the smelter’s future is expected later this year. CEO Jakob Stausholm stated that without competitively priced electricity, continued operations would be uncertain. The smelter is the largest energy consumer in New South Wales…
DB2