STRESSFUL TIMES: Boyne Smelters general manager Joe Rea says job could be saved but a deal must be done.
STRESSFUL TIMES: Boyne Smelters general manager Joe Rea says job could be saved but a deal must be done. Mike Richards GLA200117bsljobs

LISTEN: 'It's hurting': BSL boss desperate to save local jobs

BOYNE Smelter Limited jobs can be saved.

That's the message from general manager Joe Rea, who continues to desperately negotiate a deal for 15% of the site's power, with Queensland's electricity generators.

>> EXPLAINED: Who's saying what in Boyne Smelter power battle

But, after announcing a cut to production last month, he says it's now "a matter of weeks" before they will take action if a deal is not met.

>> Boyne Smelter to close cells, cut production after power price spike

>> 'Jobs at stake': Plea to save Gladstone region industry

Speaking exclusively to The Observer, Mr Rea defended his decision to stay on the spot market, while politicians and electricity generators said it was a move that put jobs at risk.

Mr Rea, currently in Brisbane, says the door is still open for a deal and his efforts to negotiate one are ongoing.

LISTEN: Joe Rea explains the potential for job cuts

To drop its electricity usage, BSL has cut 20 aluminium-generating cells, instead of the 40 that were originally suggested.

Each cell costs between 300,000 and 400,000, which equates to a saving of about $7 million.

"It's hurting ... but I'm trying to hold back and keep the door open (to negotiations) because it's a sad day when we surrender the way we work due to electricity prices," Mr Rea said.

"There's still avenues for a win-win. But the issue is each day that goes by we're starting to lose confidence in the Queensland electricity market."

The issue is Mr Rea's idea of a "competitive deal" seems different to that of CS Energy, the state's main electricity generator.

LISTEN: How confident is Joe Rea about striking a deal?

Mr Rea said he wanted a deal that was above cost of generation for the power suppliers but he still needed a price that would enable the smelter to be globally competitive.

If a deal can't be met, Mr Rea said a further 20 production cells would be cut, and jobs would be lost.

He said BSL management had already gone through the 1000-strong team with a "fine-toothed comb" to identify ways to soften the blow of potential cuts.

"I'm not going to shoot at the hip, (our workers) livelihoods deserve better than that," Mr Rea said.

The company has used the spot market to purchase 15% of its electricity load, 150 megawatts an hour, since 2015.

Mr Rea said the workers has found a way to "negate" their power usage during peak spot market price times.

LISTEN: Why BSL is on the spot market

 

"The reason we stayed on the spot market is, if we accepted the contracts, we would be accepting a deal that would make us a loss-making business," he said.

"The notion that BSL is being mismanaged is not right."

"We have instrumentation to cut power and then we have to manage reduction cells very carefully ... but we can only do that to a certain extent before it becomes unstable."

Mr Rea said prospective job cuts were "particularly upsetting".

"It's one thing if you're hardly making money, or if you're not globally competitive," he said.

"But here's the smelter, being run among the best in the world and we're having to cut it back and tell people that we can't sustain the workforce numbers."

A glimpse at Queensland's electricity market:

BOYNE Smelter Limited and owner Rio Tinto have called in to question the state's electricity generators and its pricing.

The price hike that BSL blames for its need to cut production and jobs, saw the spot market price skyrocket to nearly $14,000 per megawatt an hour, significantly surpassing the $5000MWh trigger, that requires review by the Australian Energy Regulator.

The Australian Energy Regulator is investigating the January 14 price spike, and will release its findings next month.

The Australian Financial Review reported a senior Commonwealth officer told them to "ponder the dividend flow between the State Government and its machines of power".

BSL general manager Joe Rea claims the electricity generators are "holding back" capacity, to drive up the spot price. He said January's spot market increase had already pushed up the contract prices for 2018-19.

Mr Rea says they chose the spot market over a 12-month deal in 2015 when they first noticed electricity price rises. During that same year the State Government merged five energy companies into two.
 



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