Australia government, Alcoa say making progress in aluminum smelter talks

SYDNEY Plans to provide government support to keep open a 30-year-old aluminum smelter in Australia owned by Alcoa (AA.N) have made “progress”, parties involved in talks said on Monday without giving details.

The government is offering financial support to help supply the Portland smelter in southern Australia with sufficient power in the wake of a blackout late last year that left it running at only one-third of its 300,000-tonnes-per-year capacity. However, details are still being discussed.

“Significant progress has been made over the weekend, with great demonstrations of good faith from all parties working to find a solution for the future of the Portland smelter,” Australia’s industry minister, Greg Hunt, and Victoria state treasurer Tim Pallas said in a joint statement.

Alcoa and AGL Energy (AGL.AX), which supplies the smelter with power, confirmed progress had been made in the latest discussions, but declined to elaborate.

The smelter directly employs about 700 workers.

The secretary of the Australian Workers Union in Victoria, Ben Davis, said the talks were a sign the smelter had a good chance of staying open.

“I believe Alcoa wants to keep this smelter running,” he said. “If they wanted to fold up the tent, they would have done it when they lost two-thirds of its capacity.”

Alcoa, the majority owner, has previously said it would continue to implement cost saving measures at the plant, but its future would be decided by an ability to remain internationally competitive.

A rise in electricity prices had added to pressure on the smelter, which is also battling a glut in the aluminum market.

(Reporting by James Regan; Editing by Joseph Radford)