Power policies a threat to nation: business chiefs

The heads of some of the nation’s biggest companies have blasted the chaotic state of the power grid.

BHP Billiton has warned that a long-term expansion of Olympic Dam may not go ahead if power security and costs are not addressed.

The heads of some of the nation’s biggest companies have blasted the chaotic state of the power grid, saying renewables targets need to be curbed and baseload power ­developed to prevent job losses.

BHP Billiton chief executive Andrew Mackenzie, who took a $US105 million ($137m) cost hit at the Olympic Dam copper and uranium mine in South Australia after recent blackouts, says ­renewable energy schemes could raise costs and reduce power ­security while having no impact on emissions.

The head of the world’s biggest miner has warned that a long-term expansion of Olympic Dam may not go ahead if power security and costs are not addressed and that this will probably need carbon capture and storage if emissions cuts are also wanted.

“Let’s talk about affordability, reliability and emissions reduction, as opposed to having some secondary target about just having more renewables, which might deny you all three,” Mr Mackenzie said in London last night after releasing a first-half profit of $US3.2 billion ($4.15bn).

“We have lost $US100m in this period because of the intermit­tency of power in South Australia, and also we are facing more ­expensive electricity, frankly, than we budgeted for at this time last year.”

Mr Mackenzie warned the ­nation’s unreliable power infrastructure could stop a planned ­expansion of Olympic Dam.

He told investors that a proposed future doubling of the size of Olympic Dam to produce 450,000 tonnes of copper a year would not go ahead in the current situation.

“We would not look at a major expansion of Olympic Dam unless we can be confident we have a reliable and affordable source of power within South Australia,” Mr Mackenzie said.

Chief Scientist Alan Finkel is reviewing the nation’s energy ­security following blackouts in South Australia and Victoria last year and as states embark on their own renewable energy targets.

The federal government’s renewable energy target was also ­attacked because it discouraged cleaner coal and gas plants.

Mick McCormack, the chief executive of the country’s biggest pipeline operator APA, said the gas to improve the capacity and reliability of the grid was available but that it needed governments in Victoria and the Northern Territory to end moratoriums on conventional and coal-steam gas.

“This is an issue about getting more gas to market,’’ he said.

Mr McCormack was “gobsmacked” that the energy debate had returned to coal-fired power when there was an estimated 600 megawatts of gas-fired generation capacity sitting idle while limited supplies of the fuel were sucked up for export markets out of Gladstone in Queensland.

“There has been no energy ­policy co-ordination between the states and the feds,’’ he said.

“The states have pursued ­energy policy on their own without regard for the overall system, and without having a discussion about what is good for Australia and what we expect from our ­energy policy.’’

Caltex chief Julian Segal said the nation needed to ­decide whether it wanted heavy industry, or that industry would decline. “If you say we want to have heavy industry in this country, there needs to be a recognition that energy is the most important ingredient of that and, therefore, reliable and low-cost energy is ­absolutely ­essential for that type of industry. The alternative is that whatever we have left will be diminished even more,’’ he said.

BHP’s head of Australian mining, Mike Henry, said short-term measures were required, on top of longer-term ones being looked at by Professor Finkel’s review.