As many as 500 jobs are expected to be lost with the closure of one of the state’s two aluminium smelters as a result of the strong dollar, weak metal prices and the prospect of higher power prices.
But it was the possible impact of the carbon tax on the closure decision which sparked a political brawl over the extent to which the tax was responsible.
The ageing Kurri Kurri smelter in the Hunter, which is owned by Norsk Hydro, has been losing money for some time.
Earlier this year, 150 jobs were axed as output at the plant was cut by a third.
At the time, the company launched a detailed review of the plant’s future, which led to yesterday’s decision to close it down, with the loss of 344 direct jobs at the plant.
The Coalition seized on the fact that Norsk Hydro cited the carbon tax as one of the longer-term factors that imperiled its profitability.
The opposition climate spokesman, Greg Hunt, said the carbon tax ”was intended and designed to destroy jobs” by pushing carbon-intensive heavy industries offshore in order to reduce Australia’s emissions.
The Climate Change Minister, Greg Combet, pointed to weak aluminium prices, which had fallen 40 per cent from their peak of $3300 per tonne to about $2000 a tonne, for the closure.
”The announcement … is not driven - not driven - by the implications of the carbon price, it is driven by the current pressures leading to the current financial losses that the company is incurring,” Mr Combet told Parliament.
The Prime Minister, Julia Gillard, said the biggest uncertainty for Norsk Hydro was the NSW government’s refusal to give the company a long-term electricity supply contract. Negotiations for a new contract have been in limbo since late 2010.
It is the first time a large manufacturing operation has so directly linked job losses with the carbon tax. The aluminium industry worldwide is under pressure in developed countries, threatened by cheaper competitors in countries such as China.
The closure has already had a flow-on effect, with some large contractors such as Thomas & Coffey, which axed 26 jobs following the cutback at the smelter earlier this year, looking at cutting another five jobs.
Additionally, as many as 10 jobs at Weston Aluminium, which uses waste material from the smelter, are under threat.
The Kurri Kurri Chamber of Commerce President, Rod Doherty, said that the closure had been inevitable given the circumstances.
”The impact on Kurri in the short term will be serious because there is no plan in the Cessnock local government area to generate more employment for blue collar people,” he said.
New father Brad Knight now faces his second redundancy in five years.
”You’re never ready,” Mr Knight said as he walked from the smelter. ”It’s like cancer. Someone tells you you’re terminally ill or that a parent is terminally ill, but it’s when they’re not there, that’s when it really hits home - and it’s the same here.”
