In the late Nineties, Professor Geoffrey Blainey published the history of the first 30 years of Alcoa of Australia’s story called White Gold.
It was a true account of the determination and visionary leadership of Australian and US industrialists keen to establish a world class aluminium industry in Australia soon after the end of WWII.
It was the classic case of Australia having the geological inventory in extensive low grade bauxite resources but needing the technological support of a major US partner to develop a highly complex mineral processing, refining and smelting capability.
Recall this was a time at the height of the Cold War with the former Soviet Union, when aluminium technology was a closely guarded secret and was the key to Western aerospace, defence and industrial capability in a dangerous era of global contest.
Having nearly lost the country in WWII, the need for an Australian aluminium industry was well understood by everyone. This post-war period was the time and place where Australia was rebuilding, re-orientating and developing its natural resources into an advanced globally competitive commodity-based economy.
And the emerging Australian aluminium industry was the centrepiece of this national development vision.
In White Gold, the Kwinana Refinery Agreement was acclaimed as a landmark in the industrial history of WA, with Alcoa regarded at the time as possibly the biggest mining venture in Australian history.
Fast forward to this decade and the Australian aluminium industry is now worth about $13 billion a year to the economy in export value. Around $11b of this comes from the alumina and aluminium industries, as value adding sectors. Australia is the world’s second largest producer of alumina after China and is the world’s largest exporter of alumina. About 85 per cent of the alumina produced in Australia is exported and 15 per cent is converted to aluminium domestically.
Aluminium and alumina have been part of Australia’s post-war economic success stories with regional development, employment and importantly building Australia’s global reputation as a supplier of choice to international resource commodity markets. The Australian aluminium industry is one of the most demonstrable examples of downstream minerals processing in our minerals and energy economy.
In WA this “white gold” has underpinned major energy investments such as the development of the North West Shelf gas fields in the 1980s that led to the development of Australia’s liquified natural gas industry in 1989 and the commissioning of one of the world’s largest natural gas transmission projects in 1984, the Dampier to Bunbury Natural Gas Pipeline.
Both major energy developments have brought so much wealth and prosperity to the nation in our recent history.
To allow a strategic industry investor and participant like Alcoa to close the doors on this significant refining capacity at Kwinana shows someone or something is asleep at the wheel.
This is a massive warning sign at a time of global demand for Australian mineral commodities that all is not right in the Australian economy and a time to seriously reflect on our policy priorities, whether that be energy and carbon uncertainty, diminished productivity and uncompetitive industrial relations laws or complex project approvals and prospects of further delays and bureaucratic impasse.
Serious questions need to be asked of the Australian Government as what our grand strategy is towards minerals processing when we allow a multigenerational US investor in the Australian mining industry to shut the doors on critical refining capacity in the one of the nation’s most strategic resource jurisdictions, WA.
Let’s also not forget that the bilateral security relationship between the US and Australia is cemented by the long-term economic relationship between our two nations in key sectors like resources. This US investment is critical to our national security partnership, particularly in an Indian Ocean-facing jurisdiction like WA.
Australia can do and must do better. It takes decades to discover and develop mineral resources and establish downstream industries like alumina refining. We cannot take resource investment for granted and the announcement by Alcoa to close the Kwinana refinery represents a slippery slope of future economic and social demise for our nation. Action is required this day.
David Parker is the executive director of Minerals Council of Australia WA.