Boyne Smelters will reduce aluminium production by around 14,000 tonnes for the first three months of 2014 due to high Queensland electricity prices over the summer months making production uneconomic in current market conditions.

The decision follows several months of negotiations with Queensland electricity suppliers to try to secure a competitive price for 15 per cent (140 MW) of the smelter’s electricity load which ends on 31 December this year. The remaining 85 per cent (810 MW) of Boyne Smelters’ electricity requirements are provided by a long-term contract with Gladstone Power Station that runs until 2029.

The three month curtailment will reduce production at the smelter by 8 per cent (80 MW) during the summer months. The smelter intends to return to full production from April 2014.  The new contract expires on 30 September 2014.

Boyne Smelters General Manager, Joe Rea, said “We want to operate Boyne Smelters at full production however the price for electricity over the summer period in Queensland makes it uneconomic.

“While the outcome will be challenging for the smelter we have been able to reach a commercial outcome that will enable the smelter to return to full production from April 2014,” Mr Rea said.

“The curtailment of production is extremely disappointing given the smelter’s owners have invested more than $750 million on capital improvements in recent years.

“It is an ongoing concern for our business that electricity prices in Queensland are significantly higher than other states in Australia at a time when the price for aluminium in Australian dollar terms is twenty per cent lower now than during the Global Financial Crisis,” Mr Rea said.

Boyne Smelters makes a significant economic and social contribution to the national, state and regional economy. The operation employs around 1,000 people and indirectly supports about 6,700 jobs nationally with 3,000 of these jobs in the Gladstone region.

The smelter is the largest in Australia and contributes more than $1.4 billion annually to Australia’s Gross Domestic Product with more than half of this economic benefit going to the Gladstone region.