30 May 2017

Energy prices threaten survival of Glencorp Townsville copper refinery


Glencorp Mount Isa mine and smelter

The boss of Glencorp's Townsville refinery and Mount Isa copper smelter has warned the security of its North Queensland operation is under threat due to the skyrocketing prices of energy across Australia, forcing the closure of its manufacturing business within 12 months.

Unless drastic action is taken by the federal and state governments to reduce energy prices, Glencorp provides no guarantee that the Townsville and Mount Isa operations will be able to continue in a letter written to the Prime Minister by the company.

The stark warning comes off the back of Glencorp's earlier remarks that a coal-fired power station in the north could possibly increase the competition to State energy generators profiteering from the demands for energy in southern states, and who have inadequately planned for enough baseload power generation impacting the entire Australian energy market.

The 2000 jobs supported by Glencorp's operations in Townsville and Mount Isa will add further devastation to a community already hurting from the loss of hundreds of jobs just over 12 months ago at the Clive Palmer Queensland Nickel Refinery north of Townsville, after which the local unemployment rate jumped to 13 percent.

Similar remarks are coming from other refinery and smelter operators across Australia, including big manufacturers such as BASF and Tomago aluminum smelters, who warned there was a limited chance of new investment in Australia and that further job cuts will be likely.

Reporting to the Australian Financial Review (AFR), Tomago chief executive Matt Howell, who runs Australia's largest aluminum smelter in Newcastle, said: "The company was considering cutting production due to ridiculously high wholesale electricity prices which would result in job losses."

Mr. Howell commented to the AFR that "the prices are still way too high. They should be coming down by half or more than that", he said. "We should be an energy superpower with the cheapest and most reliable electricity in the world. We are not seeing that now.", he said.

The desperation of the energy crisis is evident as the Queensland Treasurer Curtis Pitt held a lengthy meeting with Glencorp's executives in Brisbane late on Tuesday to convince the company not to move its copper operations out of the state.
Glencorp Townsville copper refinery

Energy industry expert Paul McArdle, who is the chief executive of energy software company Global-Roam, said "The Palaszczuk government policy of merging state-owned electricity companies, the power demands of the $80 billion liquefied natural gas industry and a shortfall in gas had contributed to a spike in electricity prices in Queensland," he reported to the AFR.

"The merging of CS Energy and Stanwell Corporation in 2012 -3 has led to market power issues at times of tight supply/demand balance since that time.", Mr. McArdle said.

He continued his remarks saying, "It has been escalated by two effects of the LNG industry,  - a significant increase in baseload energy consumption in the state (20% of prior overnight minimums) and the removal of large volumes of competitively priced gas, fired generation burning 'ramped gas' prior to the LNG."

If the Palaszczuk government didn't have enough pressure coming to bear from the green Labor-left under Jackie Trad and the Townsville North Queensland community on the back of the way the government handled the Adani coal mine affair, the threat by Glencorp and other large manufacturers of shutting down their operations in the State will have catastrophic consequences not only for regional Queensland but the latte sippers in the cities.