Hands out for handouts: bailouts loom for more smelters
Taxpayers could be used to bail out more smelters and refineries after the mining giant received a $600 million lifeline for two troubled facilities.
A day after Glencore’s funding injection, the Tasmanian government has called for another funding package to support an aluminum smelter in the island state’s north.
Industry Minister Tim Ayres on Thursday did not rule out further rescue deals after the state and federal governments agreed a three-year agreement to keep the Mount Isa copper smelter and Townsville copper refinery operating to protect 600 jobs.
Tasmanian Energy Minister Nick Duigan said Bell Bay Aluminum should be next in line to receive aid.
He said the Rio Tinto-owned aluminum smelter had renegotiated the price it paid for electricity with Hydro Tasmania but needed a federal subsidy to stay afloat.
The smelter’s 10-year deal with Hydro Tasmania expires on December 31, raising fears the deal will close when negotiations stall at the end of the year.
“The gap between what Hydro Tasmania is currently delivering and what Bell Bay Aluminum requires is not something Tasmanian taxpayers can fund alone,” Mr Duigan said.
Bell Bay Aluminum employs about 600 people, supports hundreds more and accounts for more than 10 percent of the state’s total commodity exports, he said.
Rising energy prices and international competition will trigger demand for more bailout packages; Australia’s biggest energy user, the Tomago Aluminum smelter in NSW, is already in the queue.
Representatives of Tomago, which is majority owned by Rio Tinto, are in talks with the federal and NSW governments over a rescue package worth more than $1 billion that would eliminate thousands of jobs.
Asked whether he expected further bailouts after the Glencore deal, Senator Ayres said the government was “closely monitoring the situation in these smelters and heavy industry”.
In February, the Albanian government announced a $2.4 billion rescue package for the Whyalla steel works in South Australia, while a $135 million package for Nyrstar’s smelters in Tasmania and South Australia was also announced in August.
Senator Ayres said Glencore had been given a lifeline to support facilities that were part of a crucial strategic sector for Australia.
He added that volatile markets and subsidies from foreign governments made international copper trading an “unfair” playing field for Australian producers.
A $600 million Glencore lifeline may not be enough to save the Mount Isa plant with the future of a key supplier uncertain.
The copper smelter relies on the nearby Dyno Nobel fertilizer plant for production.
If Dyno Nobel cannot find a new buyer by March, it could close the fertilizer plant, potentially jeopardizing Glencore production and its lucrative bailout.
“Dyno Nobel looks forward to engaging with Glencore in the coming weeks to understand the impact of the agreement reached on its production operations at Phosphate Hill,” Dyno Nobel told AAP.
David Whittle, co-founder of the Critical Minerals Consortium, said Australia needed to protect critical mineral industries but “ultimately we need to get paid for it too”.
China’s successful 40-year project to gain control over supply chains due to its large production capacity has had significant results.
“There needs to be some effort and engagement from our partners on the part of the federal government to make sure our partners are helping with this; we are the providers,” Dr Whittle said.
“This opportunity will only be realized if we can get some sort of preferential agreements with our trade and security partners so that they can provide adequate funding for these minerals and make it worthwhile to actually produce these minerals in Australia.”
Prime Minister Anthony Albanese stated that he will discuss preferential supply of critical minerals when he meets with US President Donald Trump.
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