Cian Hussey: Kwinana refinery closure spells bleak future for manufacturing

Alcoa’s announcement that it is permanently closing its Kwinana alumina refinery is just the latest sign that Anthony Albanese’s Future Made in Australia is not off to a good start.

Some 220 people will lose their job as a result of the closure, following 800 who were made redundant in June last year. These are just the latest in a wave of job losses and plant closures in the minerals processing sector across Australia.

Rio Tinto has recently cast doubt over its ability to continue operating its Bell Bay aluminium smelter in Tasmania. The future of Rio’s majority owned Tomago aluminium smelter in NSW, and the more than 1000 jobs it provides, is also uncertain after it warned that electricity prices are too high to continue operating the plant.

Nyrstar recently received a $135 million taxpayer bailout to stave of the closure of its Port Pirie and Hobart smelters. That followed a $2.4 billion taxpayer bailout for South Australia’s Whyalla Steelworks earlier this year. Another taxpayer lifeline was recently offered to Glencore to keep its Mount Isa copper smelter operating and its 600 employees in a job.

In July this year, lithium producer IGO announced that it had fully impaired its stake in a lithium hydroxide refinery in Kwinana and that the company had “low confidence in the ability of (the plant) to achieve meaningful, sustained improvement”.

Last October, BHP put its entire Nickel West division and the $1.7b West Musgrave project into care and maintenance. Andrew Forrest’s Wyloo Metals had done the same with its Kambalda nickel operations earlier in the year.

In August 2024, Albermarle announced that it would cut 300 jobs, some 40 per cent of its workforce in WA, and close half of its lithium processing capacity as part of a downsizing in the state.

After the Albanese Government offered up $8b in taxpayer subsidies to try and make green hydrogen production possible, Fortescue announced that it would cut 700 jobs and slow down its efforts to produce it.

Since then, Fortescue dumped its electrolyser manufacturing plant in Gladstone, Queensland, the multi-billion-dollar CQH2 project in Central Queensland has been abandoned, and BP has walked away from the $54b Australian Renewable Energy Hub in the Pilbara.

Rather than seeing a Future Made in Australia, we are experiencing an ongoing wave of de-industrialisation. And Australia is not alone, the same de-industrialisation has occurred in countries that have followed the path of prioritising emissions reduction.

Just consider, for example, that before Australia signed up to international climate agreements beginning with the Kyoto Protocol in 1997, we had eight oil refineries and produced 93 per cent of the refined fuel that we needed. Today, we have just two, and import around 80 per cent of our refined fuel needs.

The Labor Premier of WA, Roger Cook, has been the most honest and clear-eyed about this. He has repeatedly stated that he is comfortable with emissions rising in WA to do more mining, processing, refining, and manufacturing.

“If you are introducing green iron into WA, if you’re realising our full potential with regard to the global manufacturing battery supply chain, if we’re securing renewable energy and exporting it in the forms of ammonia, hydrogen and other forms of stored energy, potentially WA’s emissions will increase,” Premier Cook said earlier this year.

That is, you cannot have both industry and emissions reduction.

Some of the factors that influenced the wave of mineral processing and refining closure decisions are outside of Australia’s control. Australia has always been a price-taker, not a price-setter, for its exports.

But many of the factors are choices that we have made.

The Institute of Public Affairs has previously found that the burden of Federal environment legislation grew by 445 per cent between 2000 and 2019. And that is before we consider the significant potential costs of the Government’s additional green tape burdens planned, but not yet publicly disclosed, as part of its reform of federal environment legislation.

If we do want to see a Future Made in Australia, the first step must be to maintain what we are already able to make in Australia.

Cian Hussey is a Research Fellow at the Institute of Public Affairs