By Robb M. Stewart
MELBOURNE--Alcoa Inc. (AA) continues to look for opportunities
to secure natural gas to fuel its refineries in Western Australia
state, having provided seed money to three energy companies to help
develop gas fields, the head of the aluminum company's Australian
unit said Wednesday.
Alan Cransberg, chairman and managing director of Alcoa of
Australia, said alumina refining in Australia can only remain
competitive if the industry has access to plentiful supplies of
affordable energy.
The company has already invested as much as 200 million
Australian dollars (US$207 million) in recent years to help small
gas exploration companies in exchange for future supplies, Mr.
Cransberg said.
"We will continue to invest based on the right business
propositions to make sure that...we are not exposed to market
prices [and] we have got some security of supply," he told
reporters on the sidelines of a business lunch event in
Melbourne.
As energy companies in Australia have invested billions of
dollars developing abundant supplies of natural gas that can be
shipped north to Asia as liquefied natural gas, manufacturers in
the country have called on state and federal governments to ensure
a proportion of gas reserves are directed to the domestic market to
force energy prices down. Some companies have sought out their own
supply deals.
Alcoa of Australia, which is 40% owned by Melbourne-based
Alumina Ltd. (AWC), operates three alumina refineries in Western
Australia, as well as bauxite mines, aluminum smelters and other
businesses in the country.
Mr. Cransberg said the aim isn't for the refineries to be fully
self-sufficient, but for them to secure gas supplies and offset
rising energy costs.
Alcoa in February shelved plans to expand its Wagerup refinery
for up to five years. Mr. Cransberg said the project is still one
the company wants to push ahead with, but it is dependent on
securing long-term energy supplies, and on capital costs and market
conditions.
Transerv Energy Ltd. (TSV.AU) earlier this month said Alcoa
exercised its right to lift its stake in the undeveloped Warro gas
field north of Perth, Australia. The companies in 2008 struck a
deal that could see Alcoa earn a 65% stake in the project with an
investment of A$100 million.
Alcoa also has agreements with Empire Oil & Gas NL (EGO.AU)
and Buru Energy Ltd. (BRU.AU) for supplies of gas.
"There is a real role for us to grow these companies," Mr.
Cransberg said, adding Alcoa continued to look for further
opportunities.
Write to Robb M. Stewart at robb.stewart@wsj.com
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