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WA refineries escape cutbacks

WHILE alumina and aluminium refinery workers around the world have been shown the door by the major producers as they battle to cut back production, a similar fate is unlikely to await WA refinery workers, thanks to ongoing efficiency gains.

Alcoa and BHP Billiton in North America, Latin America and Eastern Europe have led to production cutbacks across the world’s 70 refineries.

WA’s refineries operate with the lowest production costs in the world, as ongoing technological research continues to bear fruit.

While operators in Eastern Europe and the Commonwealth of Independent States battle with operating costs in excess of US$300 a tonne – double the average spot price of the metal – Australian producers are operating at healthy profit margins.

Worsley Alumina Pty Ltd’s Collie refinery is ranked as producing at the lowest cost in the world, with operating costs of US$88.94 per tonne in 2000.

Alcoa’s Wagerup refinery is ranked as the world’s second cheapest producer at US$93.04 per tonne, while its Pinjarra and Kwinana refineries are rated fourth and tenth respectively.

However, the bauxite is also the lowest grade mined in the world.

Keeping WA at the forefront of the industry is a specialist team, headed by John Farrow, which operates within the A.J. Parker Cooperative Research Centre for Hydrometallurgy in Perth.

Drawing on expertise from CSIRO and the Curtin and Murdoch universities, the 30-strong team is helping the industry achieve annual production costs of gains of at least 3 per cent. (Gains needed just to maintain their status as the most efficient producers in the world.)

With an annual budget of approximately $6 million, the Centre is focused on advanced gravity thickener research, as well as the development of infrared spectrometry for the sampling of bauxite minerals

The WA producers should expect a further windfall with the Australian Bureau of Agricultural and Resource Economics forecasting alumina prices to increase by around 6 per cent, to US$157 a tonne in 2002, though still remaining at exceptionally low levels. In 2000, the average spot price was US$314 a tonne.

Despite healthy profit margins and steadying alumina prices, the mooted

$1 billion expansion of the Alcoa Wagerup refinery is set to remain on the backburner, despite getting the go-ahead for the project from the WA Government.

Alcoa was unwilling to signal what world prices would have to reach before the company would proceed with the expansion.

But the industry will need to endure a tough six months as demand continues to fall, before a resurgence in prices is expected in the latter part of the year.

ABARE is forecasting alumina and aluminium exports to increase by almost

2 per cent in 2001-2002 to nearly 13 million tonnes. However, export earnings are forecast to fall by more than 13 per cent to $3.9 billion because of significantly lower prices resulting from uncertainty in the Asian export market during the first half

of 2002.

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