Russian aluminium giant Rusal is poised to shelve a planned $A400 million gas-fired power plant at its Queensland alumina refinery as an export boom chokes lower-priced supplies of gas, according to an exclusive by the Australian Financial Review.
Rusal and joint venture partner Rio Tinto have been looking to sanction a new gas-fired 160 megawatt co-generation power plant at their jointly owned refinery in Gladstone in a bid to reduce carbon emissions and lower their overall costs for running the facility.
A feasibility study for the co-generation plant is already under way, with QAL due to make a board decision in the first quarter of 2013.
But Rusal, which holds a 20% stake in QAL, has revealed it will not proceed with the investment before the board’s official decision.
“That is one investment we don’t believe stacks up in the current environment,” Rusal Australia chairman John Hannagan told the newspaper.
The Australian reported that booming resource investment continued to undermine Australia's economic efficiency, citing a new report.
Australia's labour productivity, the value of output per hour worked, grew 2.6% over the year to June, the quickest rate in eight years, but productivity in the mining sector was slumping.
PwC's quarterly productivity update, released today, said "productivity in the mining sector slashed 0.6% off Australia's productivity growth this year", pointing to the growing share of employment devoted to mining projects that are yet to produce a return.
Substantial labour and capital resources tied up in mining drag on national productivity because it can take many years before mining projects are completed.
In the 10 years to 2010 employment in mining has tripled to 250,000, while annual resource investment now exceeds $100 billion.
Finally, Arrium chief executive Geoff Plummer has defended the company’s rejection of a $1 billion Korea-backed takeover bid, arguing that a doubling of production at its iron ore mines in South Australia will provide a buffer against falling commodity prices and the company’s $2 billion debt, the AFR reports.
In his first public comments since Arrium’s board dismissed a 75c a share offer from the Steelmakers Australia consortium, which is made up of South Korean steel giant Posco and Hong Kong commodities trader Noble Group, Plummer said the bid was timed to coincide with a sharp dip in the iron ore price.
“When the bid was made it really reflected a couple of weeks where the iron ore price had been at recent lows,” he said.
“The iron ore prices have come back almost exactly $US20 [a tonne] since those lows and I think most people still forecast ¬further strengthening.”
