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Alcoa negotiates Government Subsidy to Stay Open


Source: The Age, 6 January 2017

The Victorian State Government and the Australian Federal Government have furthered negotiations for Alcoa's Portland Smelter's electricity contracts. In the latest round of visits from Government representatives to the Alcoa HQ in the US, an offer of $200m in State funds and $40m in Federal funds (in the form of an interest free loan) has been made.

For the time being, AGL continue to play hard ball as the Government continues to pressure the retailer into lowering the electricity pricing for the smelter. Their position is strong as they are the only viable supplier of power to the smelter, which is approximately 600MW (or 10% of the state's power).

The issue of further Government subsidies is sensative in light of the fact that Alco has been subsidised by the Victorian tax payer since its inception and since the Federal Government refused to provide any further funding for the automotive industry.

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