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Employer finds closure more profitable than continuing production

Alcoa refinery
Alcoa refinery

A resources multinational decided it was better off stopping work altogether.

Alcoa recently confirmed it would gradually wind down production at the Kwinana Alumina Refinery, because it was more profitable than keeping the 60-year-old operation open.

The refinery recorded a 2023 loss before tax of about US$130 million (A$197.3M) due to age, scale, ore grades, operating costs and market conditions. However, a phased shutdown could generate about US$70M (A$106.2M) during the third quarter of 2024.

Ceasing production of up to 2.2M metric tons will bring about 610 worker redundancies by September 2024, plus another 200 retrenchments one year later. Up to 320 contractors will also be impacted.

“[This] curtailment decision comes only after thorough and careful deliberation and we acknowledge that this action will impact [on] workers, business partners and the community,” Alcoa executive vice president and chief operations officer Matt Reed said in a public statement.

“We will work closely with our employees to provide support with transitioning to other opportunities. This includes potential redeployment within our business or assistance to facilitate employment at other workplaces.”

The proponent estimates restructure expenses will range between US$180M (A$273M) and US$200M (A$303.4M). This includes water management, employee costs, asset retirement obligations and other charges.

The Minerals Council of Australia described the closure as a “devastating blow”.

“This is an alarming example of the cost to the economy, jobs and our communities when poor policy settings combine to throttle productive businesses,” CEO Tania Constable said according to Fairfax Media.

The Australian Manufacturing Workers’ Union urged Alcoa to give more exact deadlines for shutdown activities.

“It was a bit of surprise to everybody,” Western Australia state secretary Steve McCartney said according to the Nine Network.

“We did not think it was going to be this quick and that [lack of] certainty of which way it was going to go.”

The State Government proposes establishing a temporary Jobs and Skills Centre onsite at the refinery. It also invites affected employees to seek free career and training advice from both the Rockingham Jobs and Skills Centre and South Metropolitan TAFE. More than 130 free TAFE courses will be available before Christmas.

“My government will step up to provide supports for local workers to retrain, reskill and look for new career opportunities in the local area,” State Premier Roger Cook said.

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