Jobs spark up in Bell Bay power deal: reported in Brand Tasmania newsletter (June 2015)

Contractors will have extra work and 1,500 jobs will be secured through a new power deal announced by Bell Bay Aluminium (BBA) and Hydro Tasmania in May.


Tasmania’s biggest electricity customer will lift consumption from 322 megawatts to 355 megawatts a year and hopes to begin a $30 million capital-investment program that will enable production to be increased.

Following the power deal, an agreement in Federal Parliament to exempt BBA from emission taxes was set to further reduce the company's energy cost – by as much as $10 million a year.

George Town's Mayor, Bridget Archer, said: "This is welcome news for our community, and in particular local businesses, who have been doing it tough in recent years.

"There is a marked sense of optimism for the future of our area."

General Manager, Ray Mostogl, said BBA was looking at the possibility of increasing production if it could attract the necessary capital.

“Since 2012, Bell Bay Aluminium has been on a well-documented journey to restructure, transform and survive,” Mr Mostogl said.

“As a consequence, we have been exploring a number of options to improve productivity – to enable an increased tonnage over our same fixed costs.

“It goes without saying that [the power deal] is good news for the more than 1,500 Tasmanians who are directly and indirectly employed by the operation; for the local community; and for the State’s economy.”

Meanwhile, another of Tasmania's Big Picture industries, Nyrstar, says it needs the State Government to guarantee a loan to fund modernisation that is needed to safeguard its future.

Nyrstar's zinc smelter in Hobart's northern suburbs employs 600 people directly, generates about 3,500 indirect jobs and is worth an estimated $800 million a year to the local economy.

The company is seeking a loan guarantee from the State, modelled on a similar $500 million deal struck in South Australia.

“Investment decisions for key modernisation projects at the smelter are currently pending State funding support,” a Nyrstar spokesperson said.

“Nyrstar hopes to receive confirmation of in-principle support from the Tasmanian Government in due course.”

She said the proposed investment program would increase the smelter’s capacity and enable it to treat a wider range of raw materials.

The Minister for State Growth, Matthew Groom said: “Jobs are our number one priority and the Government is continuing to work closely with Nyrstar and is in the process of finalising its due diligence on their proposal.

“We are expecting an outcome soon and will make an announcement when it is appropriate.”

A third Big Picture industry, Grange Resources, announced in May that it was cutting costs and increasing efficiencies in order to ride out the global iron-ore price drop.

Grange employs 600 people directly, plus contractors, in mining and smelting at its Savage River iron ore mine and Port Latta pellet plant.

An annual general meeting of Australia's largest iron ore pellet producer in May was told the company had strong cash reserves and that production levels were at record highs.

General Manager of Operations, Ben Maynard, said the Chinese-owned company's low 11.5 cent share price was disappointing in the circumstances.

"I think it's about helping people to understand the difference between our product and these direct-ship ores; to see that the premium for these pellets will be there in the long-term," Mr Maynard said.

The Savage River mine produces magnetite ore which receives a $US20-30 premium on top of the iron ore price which is sitting at about $US60 a tonne.

Low-emission pellets produced at Port Latta receive an additional premium from steel makers.

Mr Maynard said 2014 production of 2.6 million tonnes and cash reserves of $144 million showed that Grange was in a stronger position than many bigger miners.

Like Tasmania's other Big Picture industries, Grange has been exempted from emission taxes associated with the Renewable Energy Target that has been set at 33,000 gigawatt hours, down from the previous target of 41,000 gigawatt hours by 2020.

After months of bickering, the coalition and the ALP agreed to the new target in May.

http://www.brandtasmania.com/energy-stories