WA Premier ‘disappointed’ Alcoa mulling closure Kwinana refinery

West Australian Premier Roger Cook is unimpressed Alcoa told Wall Street investors it may close its Kwinana refinery with 1200 workers after reassuring his government it had no such plans.

“Alcoa’s commentary today is disappointing and creates unnecessary uncertainty for their workforce,” he said.

Alcoa’s Kwinana refinery occupies prime waterside industrial land south of Perth.Credit: Bloomberg

“Local workers deserve better.”

Many of those workers live in Cook’s electorate of Kwinana, which is also home to the 60-year-old refinery.

Cook said Alcoa’s advice to his government was that it had no plans to close the refinery in the near future.

“We will continue to work with Alcoa to ensure local jobs are protected and its operations can continue, while maintaining the highest environmental standards.”

Cook met with then-Alcoa chief executive Roy Harvey two months ago and told him the US miner needed to understand that its mining near dams could not risk water supply to Perth.

Approvals for Alcoa to clear more jarrah forest to access bauxite have been delayed due to concerns its mining was a “very significant intergenerational risk to water quality and security of supply in drinking water catchments”.

Bill Oplinger, who unexpectedly took the top role at Alcoa’s Pittsburgh headquarters just three weeks ago, told Wall Street analysts Thursday morning (Australian time) that the company was looking at a variety of ways to drive down costs and improve profitability at the 60-year-old plant.

“But ultimately, as with any marginal asset, and Kwinana is a marginal asset at this point, we’ll consider options on the table, including curtailment and closure,” he said.

The refinery, which makes alumina from bauxite to be shipped to aluminium smelters, employs about 1200 people: 900 Alcoa employees and 300 contractors.

The news comes just two weeks after a spokeswoman for Alcoa in Australia said it had no plans to reduce production at Kwinana further.

The refinery has been running at 80 per cent of capacity for almost a year, initially due to a gas shortage and then extended because of lower grades of bauxite as Alcoa failed to get approval to clear new areas of jarrah forest.

Oplinger said the company was chasing improvements to labour and maintenance productivity, as well as seeking new markets for Kwinana’s unique capability to make non-metallurgical alumina that is sold for water treatment and other uses.

Alcoa is now mining lower-grade bauxite in WA, costing it about $US45 million ($71 million) a quarter, due to increased costs and lower production.

Since January, investors had been told the situation would last 12 to 18 months, but now Alcoa expects to be processing the lower-grade bauxite until at least 2027.

Alcoa expects to save $US10 million ($16 million) a year by cutting 90 staff roles at Kwinana by early 2024.

Alcoa chief financial officer Molly Beerman said Alcoa had a dedicated team working to find more cost savings in WA, to offset the effect of lower-grade ore.

“They’re working very aggressively to identify savings, we’ve got a great pipeline of opportunities,” she said.

Oplinger said the company’s near-term focus was gaining approvals for bauxite mining in WA.

“This is our top priority, we’re making progress,” he said

“We have the right team in place for success, and we understand the improvements that our stakeholders are expecting.”

Alcoa recently resubmitted its 2023 to 2027 mine plan for review by a committee of bureaucrats led by Premier Roger Cook’s Department of Jobs, Tourism, Science and Innovation.

Oplinger said Alcoa made three concessions in the new plan: greater distance between mining and some key reservoirs; accelerating the rate of rehabilitation of the jarrah forest; and achieving greater biodiversity in that rehabilitation.

WA Forest Alliance convenor Jess Beckerling called on Cook to protect the state’s forests and water and implement proposals for new national parks across the northern jarrah forests.

“While the Kwinana refinery may be a marginal asset according to Alcoa, our water and forests are priceless and irreplaceable assets,” she said.

“According to the Alcoa statements this morning, it is anticipating government decisions on approvals to keep clearing and mining to be made by the end of this year.

“If the Cook government capitulates to Alcoa, allowing continued clearing of ancient jarrah forests after everything we have learned this year, the community is going to be angry and appalled.”

Alcoa is yet to fully rehabilitate a single hectare of the 280 square kilometres of jarrah forest it has cleared over 60 years of mining.

Alcoa’s operations in Australia – two bauxite mines and three alumina refineries in WA, and a share of the Portland aluminium refinery in Victoria – are 40 per cent owned by ASX-listed Alumina Limited.

With Hamish Hastie.