Boyne Smelter to close cells, cut production after power price spike

IF nothing changes in Queensland's electricity market, 40 aluminium-producing cells at Boyne Smelter will be closed.

That's the message from general manager Joe Rea, right, who says it will result in jobs lost and leave the BSL down 45,000 tonne in aluminium production.

Listen: Joe Rea explains power price situation and job cuts:

Mr Rea is now taking on the Queensland electricity regulators (Stanwell and CS Energy) calling for a fair go.

"No one is saying that Queensland generators should sell power at a loss, we don't want a handout or a subsidy, but the fact is that the Queensland market price is several times the cost of generation and not globally competitive," Mr Rea said.

"Failure to resolve these fundamentals will see an end to exporting proudly Australian made goods."

The production and job cuts were prompted by what the Rio Tinto-owned BSL claims is a "criminal" spike to the state's electricity spot price, which BSL purchases 15% of its power from.

Boyne Smelters general manager operations Joe Rea announced job cuts due to increased power prices.
Boyne Smelters general manager operations Joe Rea announced job cuts due to increased power prices. Mike Richards GLA200117bsljobs

The spot price peaked at $13,888WHh last Saturday afternoon. In comparison the weekend before the average price was $66.80MWh.

The Australian Energy Regulator, which monitors the National Electricity Market, has confirmed it is investigating the five occasions the price spiked on Friday and Saturday last week.

In each instance the price surged through the $5000 per Megawatt hour threshold.

The AER, which reports on "a foundation to detect non-compliance, market irregularities, inefficiencies and consumer harm", will release its findings mid-March.

Mr Rea claims there is enough capacity in the Queensland network to meet demand and contain prices.

Meanwhile, the state's government-owned power generators Stanwell and CS Energy have defended their power prices, claiming they had offered BSL an electricity deal that the company refused.

"If BSL had accepted one of the many offers presented to it, not only would it have avoided the current volatility in spot prices but it would have been in a better financial position, as the contract prices offered are now at a significant discount to the spot market," Stanwell's chief executive officer Richard Van Breda said.

Mr Van Breda said the price hike was driven by high electricity demand in response to very hot weather conditions in Queensland. He said on January 18, a new demand record was set at 9,357MW exceeding the previous record of 9,097MW.

But it seems the energy company and Mr Rea's ideas of a "competitive power deal" are two different figures.

"Whenever production is reduced we cannot sustain the same workforce number," Mr Rea said.

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