Aluminium industry crisis

The Hunter's aluminium industry is in crisis today with Norsk Hydro announcing 150 redundancies at its Kurri Kurri smelter and Tomago Aluminium confirming a major restructure that will cost the plant at least 100 jobs.

The strong Australian dollar and low metal prices are said to be crippling the once thriving industry, which employs 1700 people across the two Hunter plants.

Read the Herald's editorial 'Hard times for smelters' by clicking here.

The announcements have not surprised the Australian Workers Union, with Newcastle branch secretary Richard Downie saying both organisations have been battling for several months.

Members had been well aware of the difficulties.

Hydro's Kurri Kurri smelter, which employs 500 people, will close Potline 1, its oldest potline. The 150 redundancies, across all departments including administration, announced yesterday come on top of 45 jobs cut late last year.

Production will be cut by a third, to 120,000 tonnes a year.

Tomago Aluminium, which employees 1200 people, will restructure its operations, shedding 100 jobs.

It plans to keep production at 530,000 tonnes a year, but will look to cut costs across the site, including to its maintenance and capital works budgets.

Over the past 12 months the global price for aluminium has fallen from a high of almost $US2800 per tonne in May 2011 to below $US2000 this month.

During the same period the high Australian dollar has made those returns even less competitive.

Hydro's senior vice-president Olaf Wigstol said the restructure was in response to a "weak macro-economic environment", low metal prices and an uncertain market outlook.

Asked if there was any possibility of a complete closure of the plant, Mr Wigstol said he could not speculate, but the financial situation was difficult.

The company has appointed a new chief executive officer. Egil Fredriksen has replaced Alberto Fabrini, whom Mr Wigstol said was on "new assignments".

The Kurri Kurri smelter, the first aluminium smelter to open in NSW in June 1969, has three potlines built over three different decades with three different types of technology.

Mr Wigstol said he was hopeful of an economic turnaround, which may make Potline 1 operational again. But, at this stage, it would close as soon as possible.

He declined to say how much money the smelter was losing, but described it as "substantial" this year.

The potline closure was expected to have a swift positive financial impact on the plant.

The company said neither the federal government's carbon tax nor Hydro's electricity contract had any bearing on the company's decision.

Tomago Aluminium chief executive John Lemberg said his company was acting to secure its long-term future in increasingly difficult economic conditions.

"Tomago Aluminium has been a significant part of the Hunter community for more than 28 years," he said. "The restructure is necessary to ensure the future of Tomago Aluminium and its ongoing contribution to the regional and national economy."

He said the restructure would allow the company to respond to global pressures.

The Hunter Business Chamber said that even though the smelters blamed global financial problems for their difficulties, the Hydro power contract debacle could not have helped and governments needed to do more to set the conditions for productivity to improve.

Federal member for Paterson and shadow minister for regional development Bob Baldwin called on the government to face up to the impacts of its imminent carbon tax.

"The opposition has been told by a number of businesses that they are being pressured not to publicly blame the carbon tax for job losses, but it is clear that the carbon tax is having a negative impact on job security," Mr Baldwin said.

The company said Hydro would stay in "close dialogue" with all affected stakeholders.

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