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Editorial - Alcoa's clue

ALCOA watchers would have had a fascinating few days last week.

The company’s Australian-born executive vice president John Pizzey was here for a few days and did some high profile presentations.

Observers of the mining giant would remember the difficulties Alcoa faced as its decades old reputation as a good corporate citizen were threatened last year.

The company is now working hard to return to the top-shelf of performers in environmental and community relations.

According to the company, this includes conducting research in conjunction with a local university to attempt to answer a question debated by scientists around the world – can a combination of non-toxic substances cumulatively lead to ill health?

Although Mr Pizzey would have little day-to-day concern with this issue, it is very important for the massive operations in Australia that he oversees, particularly at one of the jewels in the crown based south of Perth at Wagerup. It is here that Alcoa’s planned $1 billion expansion has been delayed by community concerns.

Mr Pizzey acknowledges that particular proposal can’t go forward until the health scare has been dealt with – something he believes will take years or be “in the medium-term” to quote him directly.

There is both good news and bad news from this.

Firstly, it is bad news that WA can’t give that sort of investment the green light today because it will take years to have a direct effect on the economy.

The good news is Alcoa has not given up and Mr Pizzey said the company remained committed to developing its important assets here – and doing a better job of managing them.

At an Institute of Company Directors luncheon last week, he also took the opportunity of pointing out that Alcoa’s place in the economy initially came from a partnership with government some three decades ago.

He said WA was quite visionary 30 years ago when it moved quickly to capitalise on structural change in the alumina industry – when several producer nations tried to create their own OPEC-style cartel.

Many of those nations had paid for their folly and these days were keen to attract development.

Mr Pizzey suggested that there were cycles with these things and, as the company looks at its investment options and a new commitment to its operations in WA, there has come a time when many other bauxite-rich countries were awakening to the need to assist companies with their investment plans.

The big hint from Mr Pizzey was that government needed to play a big role if the State’s alumina industry was to be further developed.

While he said the company did not necessarily believe in handouts, it would not complain if help was offered in the form of financial assistance.

I don’t know if the $200 million he mentioned was a hypothetical number, but that might be the sort of the figure other countries are pitching for this business.

That will be a tough one for a WA government that, despite wanting investment, is shy of doing such direct deals with business and of any potential increase to debt levels, which could threaten WA’s AAA credit rating.

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