Current risks to Australia’s $18b per year aluminium industry

South32 (ASX: S32) owns 86% of Worsley Alumina, an integrated bauxite mining and alumina refining operation in the southwest of WA.

Australia’s aluminium industry is calling for competitive energy and designated critical minerals status to access global capital and overcome excessive red tape.

The closure of a single bauxite mine in WA that employs 600 people can lead to the loss of 10,000 indirect jobs and a $2.7b reduction to GDP, according to latest modelling by the Australian Aluminium Council (AAC).

In the Council’s report, Economic Contribution of the Vertically Integrated Australian Aluminium Industry, research has found that the nation’s vertically-integrated aluminium industry contributes $18b a year to the nation’s economy but is especially vulnerable to supply chain disruptions.

AAC chief executive Marghanita Johnson says this calls for an urgent response from government.

“Australia is one of the very few countries anywhere in the world with a complete mine-to-market aluminium supply chain,” she said.

“It’s a remarkable achievement by generations of Australians but their legacy is now at risk from disruptions and interruptions caused by the challenges in the energy transition, uncertain environmental approvals, and uneven global competition.

“Aluminium is vital to Australia’s economy and a critical component of green technologies like solar panels, electric vehicles and batteries.

“Maintaining strong manufacturing capabilities needs to be a domestic priority.”

The report finds that the aluminium sector provides more than 20,700 direct and 55,000 indirect jobs, predominantly in regional Australia at pay rates 60% above the national manufacturing average.

The annual export revenue of the aluminium industry is more than $15b and the report recommends a range of policy changes to preserve Australia’s status as a world leader in sustainable aluminium production.

These include:

• streamlining environmental regulatory processes for the nation’s bauxite resources;
• providing targeted support for decarbonisation and the energy transition;
• adding bauxite, alumina and aluminium to Australia’s critical minerals list; and
• maintaining robust international trade remedies to prevent unfair trade practices such as dumping and subsidisation.

“Our Australian aluminium industry has a track record of technical innovation and adapting to changing market conditions,” Ms Johnson said.

“With the right settings, the industry can continue to play a pivotal role in the national economy and the country’s industrial landscape, just as it has done since 1955.”

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