Alcoa’s decision to close its Point Henry aluminium smelter at Geelong, at the cost of 500 direct jobs, will likely cause a ripple effect through Latrobe Valley’s electricity generation sector.
Operating at an average electricity demand of 360 megawatts – one quarter of Hazelwood’s generation capacity – the closure will represent a significant reduction in the state’s overall electricity demand.
Alcoa announced on Tuesday it would close the facility in August, after a two-year review of the plant found it to be financially uncompetitive, due to the high Australian dollar and low commodity prices.
Environment Victoria acting chief executive Mark Wakeham said the Alcoa decision could prompt the closure of a Valley-based generation unit.
“It is highly likely that existing coal-fired generation at Anglesea, or at Yallourn or Hazelwood, will be mothballed or retired as a result of Alcoa’s decision, despite Alcoa’s stated intent to try and find a buyer for the Anglesea mine and power station,” Mr Wakeham said.
In March 2010 Loy Yang owner and operator AGL announced it had entered new base-load electricity contracts to hedge Alcoa’s smelter at Point Henry, Geelong, and its Portland aluminium smelter – which will continue to operate until 2036.
However in December last year, a Supreme Court-ordered mediation terminated the Point Henry electricity supply agreement through a mutual settlement during a contractual dispute.
“The contracts were due to commence in 2014 for the Point Henry smelter and in 2016 for the Portland facility,” an AGL spokesperson said.