Hydro Norway has announced that its Kurri Kurri smelter in Australia is to be closed, for the loss of about 340 direct jobs (plus many others in support industries), and of about 120,000 tonnes of primary metal.
While this announcement comes as no surprise, it’s still a sad story.
Kurr Kurri is a small town in the picturesque Hunter Valley, about 2 hours north of Sydney, and about 30 minutes from the bigger Tomago smelter. The town is on the edge of a famous wine district and a large coal mining area, so at least some of the staff should be able to find jobs. Kurri Kurri means “beginning” in the local aboriginal language.
The Hydro announcement laid the blame for the closure on high power costs and a strong Australian dollar! Combined with depressed metal prices.
But I think there is another reason, though it may not be directly linked to this old, little smelter.
As we heard on Wednesday at the AZ China conference, China has been a strong exporter of finished and semi finished aluminium. Even though the price of raw aluminium is higher in China, once you get downstream, where labour and processing costs are mmuch lower, and the metal premium is not a factor, China can sell aluminium goods into Australia cheaper than if they were made locally. Effectively, it’s the same as Australia does in wool and iron ore – we sell China the raw materials, then buy back the finished clothing and steel. We sell alumina and bauxite to China, then wonder why our local aluminium industry, and broader manufacturing industry, is disappearing
The Hydro announcement did not give a timeline for the closure. But I expect it will happen quickly, possibly within 2 months.
ciow
jlb