AUSTRALIA: Aluminium smelting industry is a net economic drain

A study has shown that if the aluminium smelting industry were to stand by its threat and depart from Australia, the country's economy would benefit. It would also reduce Australia's greenhouse gas (ghg) emissions by 6.5%.


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The Australian Aluminium Council (AAC) threatened to up sticks and leave the country if it was not granted an exemption to the country’s ghg emissions reduction efforts. Now, a study from the policy research centre, The Australia Institute, has taken the AAC’s threat seriously and shown that the industry offers little benefit to the nation.

The Aluminium Industry and Climate Change estimates that the electricity subsidies to the aluminium smelting industry amounts to AUS$410 million each year. The price the industry pays for electricity is, in fact, secret, but it is thought that the smelters pay between 1.5 and 2.5 cents per kWh as opposed to 5-6 cents per kWh by other large industries.

With the smelters accounting for 28.5 million tonnes of ghg emissions annually, the study has calculated the cost of those emissions at AUS$430 million (based on a hypothetical emission permit set at AUS$15/tonne of CO2).

The study concludes that “every dollar of income from aluminium exports has a resource cost of AUS$1.24” and”if the aluminium smelters carried through with their threat to shift out of Australia in response to the introduction of greenhouse gas abatement policies, the analysis indicates that their departure would result in a net economic benefit.

The Australia Institute has also pointed out, in time for the Seattle WTO talks later this month, that the electricity subsidies awarded to the aluminium smelters “are almost certainly contrary to the provisions of the General Agreement on Tariffs and Trade”.

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