US President Donald Trump’s tariffs on steel and aluminium imports are creating major uncertainty for producers in the area of NSW that is home to Australia’s largest aluminium smelter, says the peak body for business in the key economic region.
Bob Hawes, chief executive of Business Hunter, which represents producers in the Hunter Valley, where Tomago Aluminium, the country’s largest smelter, is based, said if an exemption being considered for Australia did not extend to aluminium imports, the wider impact on the region would be at “a very high level”.
Tomago Aluminium, north-west of Newcastle, is the country’s largest smelter, producing 590,000 tonnes of aluminium yearly, about 37 per cent of Australian production.Credit: James Brickwood
“The uncertainty is killing us,” he said. “Tomago Aluminium is a significant employer within the region, and we also have a lot of other fabricators.
“The regime that the United States is currently putting in place will cause a lot of disruption … until we see the detail.”
It comes after Trump’s senior trade and manufacturing adviser, Peter Navarro, said Australia was “killing” the US aluminium market. The comments cast doubt on a possible exemption from 25 per cent tariffs on both metals following a phone call between Prime Minister Anthony Albanese and Trump, who said he would give “great consideration” to Australian exemptions.
Tomago Aluminium, which does not itself sell the metal it produces, declined to comment, directing inquiries to its parent companies, including majority stakeholder Rio Tinto, which also declined to comment.
Rio Tinto board director Jennifer Nason, who was instrumental in convincing Trump to exempt Australia from similar tariffs in 2018, told The Australian Financial Review on Wednesday she thought exemptions were likely after negotiations.
The NSW government says it is closely monitoring the risks posed by tariffs, including for Tomago, which consumes 12 per cent of the state’s electricity.Credit: James Brickwood
The NSW government says it is closely monitoring talks between the federal government and the US. When Treasurer Daniel Mookhey handed down his second budget last June, he warned US tariffs were the “biggest threat” to the state’s economy if Trump won November’s election.
Mookhey on Wednesday reiterated the “geopolitical risk” to the economy, in particular for workers at Tomago and the BlueScope steelworks in Port Kembla.
“NSW is home to the bulk of Australia’s aluminium productions, as we are to Australia’s steel production,” he said. “There are lots of businesses and lots of workers who want those talks to go well.”
A worker approached by the Herald outside the Tomago smelter said staff were prevented from speaking publicly. Paul Farrow, national secretary for the Australian Workers’ Union (AWU), which represents employees at Tomago, said despite the Albanese government’s “hard backing” of the aluminium industry, the tariffs had caused unease.
“Tariffs are never good news for those in export industries, so of course there’s a concern,” he said.
About 580 union members began rolling industrial action last month as part of ongoing pay negotiations.
In an interview on CNN on Wednesday (AEDT), Navarro accused Canada and Australia of flooding the market, accusing the latter of going back on a purported agreement to limit aluminium exports in exchange for an exemption in 2018.
Canada provides about two-thirds of US aluminium imports. Of the $5 billion of aluminium exported by Australian producers each year, 10 per cent goes to the US, about 2 per cent of overall US imports.
Hawes said he thought Navarro’s comments were unfair. “We’re relative minnows when it comes to the amount that we produce,” he said.
“I can’t imagine that we’re having the tidal effect on the American economy we’re being accused of.”
With Nick Newling
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