How to solve Australia's energy crisis? Close the aluminium smelters

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Old King Coal and his fool almost certainly won't have the strength and audacity to do as Dr Sanders suggests (Image via @AustralisTerry)

Closing Australia's aluminium smelters makes good financial, environmental and energy supply sense, writes Dr Norm Sanders.

THEY USE 14% of Australia's electricity, add to greenhouse gases, get taxpayer subsidised power and are largely foreign owned.

Aluminium is one of the world's most common minerals. It is an everyday part of our lives — from beer cans to Boeings. (Actually, Boeings, being made in North merica, are constructed of aluminum — same stuff.)  Although it is very common, aluminium is not all that easy to transform from dirt to aeroplanes. The process requires an incredible amount of electricity.  It takes three times as much electricity to produce one tonne of aluminium as the average Australian household uses in a whole year. Aluminium smelters use so much power visitors are warned that the electromagnetic fields can damage mobile phones, watches and cameras. For this reason, aluminium has been called "congealed electricity".

Aluminium production is a multi stage process. Bauxite ore is dug out of the ground and refined into alumina (aluminium oxide), which is smelted to make aluminium. There are five Australian bauxite mines: Boddington, WA; Gove, NT; Huntly, WA, Willowdale, WA and Weipa, Qld. The refining process uses large amounts of caustic soda, but comparatively little electricity. Once the alumina stage is reached, it is loaded onto ships and taken to a smelter.

The process of extracting aluminium from alumina is accomplished through electrolysis, using the Hall-Heroult method. In addition to using vast amounts of electricity, aluminium production is very polluting. A large quantity of carbon is released into the atmosphere as greenhouse gas emissions. Flouride waste is another problem.  Originally, it was dumped into watercourses near the smelters. When local governments in America started complaining in the 1940's, the aluminum companies came up with a plan which is still causing angst today. 

They brilliantly turned the flouride from industrial waste into a saleable product. The leader was Alcoa, the Aluminum Company of America, who ran a campaign including advertisements in the Journal of the American Waterworks Association extolling the virtues of sodium flouride:

"ALCOA sodium fluoride is particularly suitable for the fluoridation of water supplies .... If your community is fluoridating its water supply – or is considering doing so – let us show you how ALCOA sodium fluoride can do the job for you."

(ALCOA of Australia runs the Portland, Victoria smelter, where ALCOA (America) has a 51% interest.)

Aluminium smelters are hazardous places to work. In addition to the high magnetic fields, workers are exposed to sulfur dioxide and fluorides; aluminium fluoride; fibrous sodium aluminium tetrafluoride particles; fluorspar; alumina; carbon monoxide; carbon dioxide; various trace metals, such as vanadium, chromium and nickel; asbestos; and extreme heat.

When Dr Bob Brown moved to Tasmania in 1972, he became a GP in Launceston. He soon found that many of his patients were employed by the Comalco smelter at nearby Bell Bay. He launched his first campaign on their behalf. 

Australian governments at every level have always been eager to give away the people's resources and money to big business. The Portland Victoria smelter is a good example.

The Victorian Government has just given a four year, $210 million subsidy to Alcoa. In addition, the Federal Government is coming to the party, with a $30 million interest free loan. The subsidies insure that the smelter will be able to continue to burn 510 megawatts of power, which is 10% of Victoria's total consumption.

In common with most smelters, the Portland operation was installed to take advantage of the base load provided by a large coal-fired power station. In this case, the old, pollutiing, Hazelwood generator in the Latrobe Valley, which is being shut down. It is ironic that smelters which were supposed to soak up surplus power are now clamouring for expensive, new coal-fired plants and increased subisidies.

Of course, not all the subsidies are so easy to determine. Most are in the form of very low power prices. The exact numbers are closely guarded secrets but, in general, the smelters pay about half the rates of other industrial customers and about a tenth of the bills of residential users. 

In some cases, the power is actually sold below the cost of generation. The "Comalco” smelter at Bell Bay is owned by Rio Tinto Alcan, a Canadian company. During the Franklin Campaign. figures were leaked showing that the smelter was indeed being heavily subsidised. It became obvious that, since the smelter burned a whopping third of the state's electrical supply and was costing the taxpayers money, it would make sense to shut down the smelter and eliminate the necessity for more dams. Common sense lost.

All the other Australian smelters share the same sweetheart deals with government. Boyne Island smelter in Queensland is the biggest in Australia. It has a long term contract with the government-owned Gladstone coal-fired power station. Boyne Island burns almost 1,000 megawatts of power, which is a significant portion of Queensland's total consumption. The smelter is operated by “Pacific Aluminium”. This is a nice, local sounding name, but the smelter is 59.4% owned by Rio Tinto Alcan, with the rest by a Japanese consortium of Sumitomo, Marubeni, Mitsubishi and YKK.

The Tomago smelter near Newcastle, NSW, is also a big user of power, some 10% of the state's grid. “Tomago Aluminium” is actually Rio Tinto Alcan (51.55%), Gove Aluminium Finance (36.05%) and the Norwegian company Hydro Aluminium (12.40%).

The smelter operators always brag about how many people they employ and shed tears over their future any time smelters are threatened. It may be a good PR tactic, but the employees are just pawns in the big business game. Workers are the first to go any time costs need to be cut to protect profits.

As far as the workers are concerned, they would probably be grateful for a job building solar farms or windmills instead of spending their time in a poisonous work environment. (And they even could use their mobile phones and wristwatches on the job!)

Clive Hamilton and Hal Turton prepared an Australia Institute background paper entitled 'Subsidies to the Aluminium Industry and Climate Change'. They pointed out that smelters accounted for 16% of the greenhouse gas emissions from electrical generation, in addition to quantities of greenhouse gases emitted during the smelting process itself.

On subsidies, they said:

'The direct financial subsidy provided to the industry by taxpayers and other electricity consumers amounts to a large proportion of total industry costs. If electricity costs comprise one third of total operating costs, and smelters pay around 60% (probably at most) of the market price for electricity supplied to large industrial customers then the subsidy accounts for around 13% of total industry costs. This suggests that all of the profits of the industry are provided by subsidies paid for by taxpayers and other electricity consumers. Furthermore, most of these profits do not accrue in Australia but are repatriated to foreign parent companies.'

Closing Australia's aluminium smelters makes good financial, environmental and energy supply sense. Malcolm Turnbull has just come up with a $2 billion, four year plan to build pumped storage into the Snowy Scheme. Government backbenchers are pushing for nuclear power (They would, wouldn't they?) which would take at least eight years to build. Closing the smelters could be done at the flick of a switch, now.

Dr Norm Sanders is a former Tasmanian MP and Australian Federal senator and TV journalist. Norm interviewed Bob Brown about Comalco on ABC 'This Day Tonight' during the Franklin Dam campaign.

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