Tomago will not be around that much longer as its cost of production is much higher than recently built plants.
Most of you will know that in the industry that Aluminum is called 'solid electricity'. What most people do not realise is that any state with an Aluminum smelter is paying a subsidy (nicely hidden) in the hundreds of millions each year.
Why a subsidy? Because it is a hangover from the 1950s power grid - coal-fired stations need to operate 24 hours a day to breakeven let alone make money. For large parts of those 24 hours there was no demand for the coal-fired electricity so.....
A smart 'consultant' (not called that in those days) convinced once State Govt that they must get an Aluminum smelter, and the dominoes started falling. Once the interconnector was built between Tasmania and Victoria - from a Federal perspective - Bell Bay should have been shut down. That would have seen relatively small job losses but would have seen the Australia-wide (not WA though) cost of power drop 5-12% (according to an embargoed report).
Imagine what benefit that would have been to Australian businesses and the general public as a whole?
It was never looked upon as what is best for Australia as a whole but literally 'bugger thy neighbour state'. Each State looked to supposedly maximise their monopoly generators profits at the expense of the community and Australia as a whole.
_____________________________________________
Tomago on a typical day uses
over 12% of all electricity consumed in NSW. However it
pays around 10-15% the price that home owners pay per kwh. I know of one agreement where the price was set at 5% of the price at setting dates (every ten years).
This article is a little out of date but it provides some number to help understand what's going on.
https://agmetalminer.com/2015/11/24/power-costs-the-production-primary-aluminum/
Although the newest smelters can be closer to 12,500 kWh per ton, let’s say most smelters are consuming electricity at 14,500-15,000 kWh/ton of ingot produced. With the LME at $1,300/metric ton, that means electricity should be costing a typical smelter $0.029/kWh.
Needless to say, smelters are rather coy about their power cost contracts so it’s hard to verify how prevalent this number is though many smelters are on variable power cost contracts with their electricity suppliers such that the power generators are paid a fixed percentage of the world ingot price. If we take that as one-third, then it’s not only smelters that are losing money –
many power generators must be, too.
When US national average industrial and commercial electricity consumers are paying $0.0706/kWh and $0.1013/kWh, respectively, according to the
Energy Information Administration, to be
selling power to smelters at $0.029/kWh represents a huge subsidy.
So companies (foreign mainly) play one state off against another state or country, and allegedly make donations to certain political parties (legally and illegally). Even then they find better deals (more corruption - never) overseas which has seen Alcoa close all but one of its US smelters (for example).
...and Australians now have the highest electricity prices in the world despite having the closest supply of coal (power stations built next to the mine), most plentiful supply of gas, best solar resources and amongst the best wind resources.
1 + 1 no longer makes 2 in Australia.
