Norsk Hydro Aluminium Smelter Closure


Today I speak with a heavy heart. Three hundred and forty-four is the number of jobs that will soon disappear from the employment landscape of the Hunter when the Norsk hydro aluminium smelter finally closes its doors, which is expected to be in approximately three months. Yesterday morning the people of the Hunter woke to the news that the smelter would enter into dialogue with the workforce about the closure of the plant. At the beginning of this year the hydro aluminium plant reduced its workforce by 150 workers and cut production by 30 per cent. It also closed potline No. 1, the oldest of its potline infrastructure. In the ensuing four months it has continued to operate potlines Nos 2 and 3, desperately searching for efficiencies and savings and building a business plan for the future.

When I spoke with management yesterday morning they went to great lengths and placed great emphasis on the efforts of the workforce doing everything humanly possible to secure a future for the plant. The three key elements of a business plan for an aluminium smelter are, firstly, the price of aluminium on the London Metals Exchange, secondly, the price of the Australian dollar and, thirdly, the price of electricity. Obviously, the first two are macro-economics and are beyond the control of this House or this State. But the third element is the price of electricity—and this factor is a plague on this Parliament. In late 2010, at the last minute, the New South Wales Labor Government failed to sign off on a long-negotiated price for future electricity.

This contract would have ensured that the plant had electricity from 2017 to 2027. The current contract expires in 2017. That was Labor’s mistake and problem. In the lead-up to the March 2011 election, a broad range of Coalition members made bold and definitive statements about their intention to make sure that Norsk Hydro got its contract and electricity. Those members included five current Ministers, the Premier and the Deputy Premier, all of whom made various visits to the plant and stood side by side with workers. Since the election nothing has happened. This now is the Coalition’s mistake and problem; and it is a plague on the Parliament.

With this in mind, it is vital that at this point in time we should not, and I do not, lament on past misgivings for which both parties are guilty. It is crucial that we talk about the way forward and the future. Today in this House I call on the Premier to mobilise his Government and departments to achieve a jobs plan for Kurri Kurri. The obvious agencies to include are TAFE, the Department of Trade and Investment, Regional Infrastructure and Services, and Treasury. The Premier should recognise the significance of the problem for the State’s manufacturing workforce and take a hands-on approach. Those agencies should report whatever steps they take directly to the Premier. This action must happen immediately, not next week or next month. Action needs to start today—in fact, it needed to start yesterday.

Yesterday, today and tomorrow 344 workers and families are unsure of their future. State and Federal governments must act now. Recently the New South Wales Government awarded a Sydney Ferries manufacturing contract to a Victorian company, overlooking a tender placed by Newcastle firm Forgacs. This example is the very action now required to support the Hunter. Had that contract been awarded to Forgacs, it would have recruited more workers and would have looked to those being sacked from the hydro aluminium smelter. As has happened in the past, much will be made of whether the carbon tax caused the problem. The hydro aluminium smelter lost $36 million in the last financial year, $12 million in the year prior, and looks like losing somewhere in the vicinity of $70 million this financial year. None of those past financial statements features the carbon tax as relevant.

The London Metals Exchange currently has aluminium priced at $2,000 a tonne; it used to be $3,300. The price has fallen 40 per cent. For much of the past two decades the Australian dollar traded at around 70¢ to 80¢ against the United States dollar, but that has changed in the last couple of years. Indeed, this is an unfortunate and tragic perfect storm. If one or two of these factors had existed, the hydro aluminium smelter at Kurri Kurri could have had a future. I drove this issue during my March 2011 election campaign to get elected to this place. I spoke on this issue in my inaugural speech and have done so on a number of occasions since. I have sought meetings with the Premier, but have been refused. I sought a meeting with the Minister for Resources and Energy, who welcomed me and spent time talking through the process—I thank him for that. He assured me that the hydro aluminium smelter had had a power price put to it. I ask the Premier to now get involved in finding jobs for the 344 sacked workers.