By Nick Toscano
Aluminium giant Alcoa has locked in a new electricity deal to power its Portland smelter in Victoria’s south-west, strengthening the outlook for the plant’s future and the job security of the 760 people it employs.
The deal between United States-based Alcoa and Australian power utility AGL, finalised on Monday, increases electricity supply for the energy-intensive smelter for another nine years following the expiry of its existing contracts in 2026.
The future of Alcoa’s Portland smelter has been secured until 2035.Credit: Jessica Shapiro
The fate of the Portland aluminium smelter and its large workforce was under a cloud as recently as 2021 after Alcoa embarked on a push to sell up to $1 billion of assets and close down facilities around the world to boost its bottom line and cut greenhouse gas emissions. The Portland smelter produces 18 per cent of Australia’s aluminium and is Victoria’s single biggest electricity user, making it a heavy carbon emitter.
The Victorian and federal governments tipped nearly $160 million into a multi-year rescue package in 2021, while power giants AGL, Origin Energy and Alinta struck deals to supply it with power until 2026.
Alcoa, which owns 55 per cent of a joint venture that owns the Portland smelter, said AGL’s nine-year deal to supply 287 megawatts of power from July 2026 came on top of a previously agreed 300-megawatt deal with AGL.
The combined contracts guarantee the smelter’s electricity until 2035 and will enable it to increase production from 80 per cent to 95 per cent of its nameplate capacity of 358,000 tonnes of aluminium per year, the company said.
Alcoa Australia interim president Tanya Simmonds said the agreement secured power for future production requirements and would help support local jobs, economic benefits and community support for the region.
“Alcoa, together with our Portland aluminium smelter joint venture partners, is pleased to have reached agreement with AGL on this contract that helps provide greater certainty about the future of the 760-person workforce, local suppliers, the Portland community, and many more in the region,” she said.
In a statement, AGL said the new deal with Alcoa contained an option to replace up to 30 per cent of the contracted electricity volume with a renewable energy power-purchase agreement.
Alcoa said about 40 per cent of the smelter’s electricity presently comes from renewable sources, including the nearby Portland wind farm.
“Alcoa continues to explore other opportunities to bring more renewables into the smelter’s longer-term energy mix,” the company said.
Aluminium, which has various applications in construction and consumer products, is also one of the most widely used materials in manufacturing clean energy infrastructure, such as solar panels and wind turbines. Transitioning the world towards green energy sources is expected to drive a 50 per cent increase in demand for aluminium in the electricity sector, according to industry estimates, while the global car industry’s aluminium consumption is set to rise by 60 per cent by 2030 due to soaring uptake of electric vehicles.
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