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2019: A look back on the Aluminium Industry

December 24, 2019

Shaping Australia’s energy policy

We’ve been campaigning hard for a more sustainable energy policy; one that will serve both Australia’s future needs and ensure that our industry can thrive and not be under threat. With the right policy settings, Australia’s abundant energy supplies means our country can and should be the world’s smelter.

We need political consensus on energy policy and that’s why we have urged, and will continue to urge, the Labor party to back the coalition’s energy targets and end the Climate Wars.

We’ve also been very active in the debate over nuclear energy. Our National Secretary Daniel Walton said it was “ludicrous” for Australia not to capitalise on its uranium resources, as 31 advanced economies worldwide relied on nuclear power.

We are urging the government to lift Australia’s moratorium on nuclear energy. It will secure jobs and help us meet clean energy targets, and will also mean that in the future power outages like the one we saw at Portland will be a thing of the past.

We also put in a submission to a separate nuclear inquiry here, and are finalising a submission to the NSW Uranium and nuclear facilities inquiry.

On Friday December 6, the Assistant National Secretary, Misha Zelinsky and WA Branch Secretary, Brad Gandy, met with delegates and the WA branch team at the AWU Allsites Committee AGM. Thanks to all who attended!


Global trends in aluminium

The aluminium industry is under pressure the world over.  Global demand has slumped to around 1.5% growth per annum, and domestic demand has dropped due to a decline in manufacturing.

The US tariff war may also affect Australia’s export market. As a result of the US placing tariffs on Mexico and Canada, Australia exported 300,000 tonnes in the first half of 2019 – a significant increase in volume. It’s likely that this was a temporary uptick, as those tariffs have now been exempted from the United States’ closest trading partners.

Like steel, aluminium products suffer from unfair competition from dumped goods, particularly from China. The AWU continues to lead the fight to make sure we have the world’s strongest anti-dumping laws and that other countries are forced to play by the rules when it comes to trade. AWU representatives attended the International Trade Remedies Forum in December this year and will continue to press for government action in this space.

Boost to wages and longer breaks at Tomago

At the Tomago site, it’s been a very busy 12 months with some big achievements in bonuses, wages and break times.

Last January, 5% of the base rate was paid out as a bonus, and we are on track to do the same in January 2020 – a great way to start the year. Workers also received a 2.5% wage increase last January and next month we will get a 2% increase if members accept the deal. We’ve also extended our meal break time from 40 minutes per 12-hour shift to 60 minutes. It’s a great win and really will make a difference.

We also supported the community by fundraising via Out-Of-Pay Donation Schemes for the John Hunter Children’s Hospital and Soldier On, who received $20,000 each. A huge thanks to Wayne, the on-site delegate, for once again assisting with this initiative.

Lastly, this is a good time to remember member, Stan McManus, was tragically killed on his motorbike while travelling home from work in May.

Queensland Alumina – A Long-Term Future

The future looks very good for Queensland Alumina up in Gladstone. Earlier this year, QAL announced a $240 million investment to be spent over the next five years on improving the plant’s environmental performance.

AWU delegates have also been told informally that the Rio Tinto owned plant, which has been operating for 52 years already, has another 60 years ahead of it. QAL is the largest employer in the region, so this is great news for members and the community.

Alcoa EBA

This year saw the wrap up of mammoth three-year negotiations with Alcoa in Western Australia. Our 1600 AWU members felt so strongly about Alcoa’s aggressive approach to negotiations they walked out for an epic 52 days of strike action. The action extracted meaningful concessions from the company on a key union claim – job security.

During this period, Alcoa successfully applied to have our EBA terminated – meaning that AWU members would be forced to the Award. This meant pay cuts of up to 50 per cent and the loss of vital conditions. In a significant victory, the AWU successfully had the termination overturned on appeal.

AWU members fought incredibly bravely, and while they weren’t able to deliver everything they wanted, it was the best possible outcome achieved in a very difficult environment.

The new agreement offers members competitive remuneration, acknowledgement of our union structures and, most importantly, provide job security. We are hopeful that over the next four years we can work towards putting ourselves in the best position to recapture lost ground.

The future of the Portland smelter

In October, Alcoa announced the Portland smelter could be shut or sold as part of a global review of its aluminium portfolio.

Alcoa says this decision is part of its plan to become the world’s lowest per-ton carbon emitters among aluminium producers, but it’s clear that the high price of power is playing a huge role in Alcoa’s decision making.

Just this week, it was revealed that GFG Alliance founder Sanjeev Gupta is in talks with Alcoa to purchase the smelter, and a deal could be reached early in the New Year. GFG has multiple large holdings in Steel across Australia, including the Whyalla mill, purchased from Rio Tinto in 2019. We will keep you updated with the latest news via our Facebook group, so be sure to join us online.

Back in 2017, the AWU worked with the company, governments and AGL to deliver a $230 million package to help fix the damage to the plant caused by the massive power outage. We also made sure the plant received an affordable power deal. With the power contract for Portland ending in mid 2021, the battle to save Portland is now back on.

This is a fight we can and must win. 600 people are employed by Alcoa in Portland, along with 180 contractors. The plant creates thousands of jobs in the local community and is a vital economic engine of regional Victoria.

Rio Tinto is also in talks with the Federal and State Governments over its high energy costs. Rio says energy costs make up over a third of its total cost structures at Boyne in Queensland, Bell Bay in Tasmania and the Tomago smelter in NSW, which it owns a stake in.

Alcoa Portland power outage

Portland is no stranger to power issues, as AWU members know only too well.  A blackout in 2016 caused molten aluminium to solidify, crippling the plant for months.

Members were once again put to extreme test just last month when a severe power outage led to one potline being offline for four hours, before another went offline for more than eight.

After a 3 hour 34 minute outage, power was restored to potline one. Potline two was restored after 11 attempts at restart, with the line being lost for 8 hours 43 minutes.

It was only due to the exemplary efforts of AWU members who were on duty and those that came in on their days off that the plant was saved.

The loss of power supply to the smelter has been traced to a fault at the Heywood terminal station and was outside of the control of members working on site.

While we commend everyone for this superhuman effort, the truth is these sorts of incidents would be avoidable if Australia had a secure and stable power source.

Rio Tinto in Australia

It’s not just Portland which is under a cloud. Rio Tinto is also reviewing the future of its smelters in Australia – at Bell Bay, Boyne and Tomago which collectively employ more than 2500 people. These two global reviews have a potentially massive impact on Australia’s aluminium operations.

CEO Rio Jean-Sebastien Jacques blamed the review on falling demand from the automobile industry and high energy costs – a recurring theme affecting our industry’s future.

Rio’s Pacific Aluminium business is not in good shape – it suffered a net loss of $US151 million in the year to June 30.

“We’re in discussion with the federal government and the state governments and our utility providers, depending on which smelter we’re talking about, in order to see ways to ensure the long-term viability of those assets,” Mr Jacques said earlier this year.

Resources Minister Matt Caravan has backed the industry and said future energy needs would still have to be met by coal:  “If those that want to shut down our coal-fired power are saying ‘let’s shut down our aluminium industry and put thousands of people out of a job’, I don’t want to be a country that doesn’t have a strong manufacturing sector.”

Our industry has been a great success story in Australia, and we should be able to continue on for many decades to come. But we do have a battle ahead and we will be working with Rio, Alcoa, the energy companies and every level of government to ensure our future viability.

AWU National Secretary Daniel Walton has met with Minister Canavan and relevant company heads and action is expected in the new year.

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