Business

Smelter cuts back production as Gladstone industry suffers

Laid-off Santos GLNG workers prepare to be flown to Brisbane with Alliance Airlines.
Laid-off Santos GLNG workers prepare to be flown to Brisbane with Alliance Airlines. Mara Pattison-Sowden

BIG industry is continuing to suffer, with Boyne Smelter and Orica Yarwun cutting back production due to a struggling economy.

Meanwhile, dumped construction workers from the Santos pipeline project saw the silver lining over being laid off right before Christmas - they were able to head home to their families.

150 pipeline workers bus into Gladstone after mass lay-off

The deadline to secure a competitive price for 15% of Boyne Smelter's electricity load has passed and the company has decided to reduce aluminium production by around 14,000 tonnes for the first three months of 2014.

The decision follows several months of negotiations with Queensland electricity suppliers to try to secure a competitive price for 140mW of the smelter's electricity load which ends on December 31 this year.

The three-month curtailment will reduce production at the smelter by 8% due to high Queensland electricity prices over the summer months, but the smelter intends to return to full production from April 2014.

The remaining 85% of Boyne Smelters' electricity requirements are provided by a long-term contract with Gladstone Power Station that runs until 2029.

Boyne Smelters general manager Joe Rea said while the outcome would be challenging for the smelter, the commercial outcome will enable it to return to full production from April 2014.

"The curtailment of production is extremely disappointing given the smelter's owners have invested more than $750 million on capital improvements in recent years," he said.

"It is an ongoing concern for our business that electricity prices in Queensland are significantly higher than other states in Australia, at a time when the price for aluminium in Australian dollar terms is 20% lower now than during the global financial crisis."

Orica Yarwun made a decision to suspend production at its chlorine plant, also due to economic reasons, impacting up to 20 operational staff.

Plant manager Jon Barden said it was a common occurrence in the processing industry "to stop producing, shut down the plant and look after it to ensure if it's viable we can start it back up".

He said a small number of employees would be impacted but they would all be repositioned within Orica.

"Chlorine production is a relatively small part of the site, and the majority of our operations are completely unaffected."

Gladstone Airport was buzzing with activity on Friday as more than 150 construction workers who had been laid off early in the morning were bussed in and awaited chartered flights back to Brisbane.

Topics:  boyne smelter gladstone business glng industry orica resources



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