Hundreds of Jobs Lost in WA With Alumina Refinery Closure

Alcoa cited operating costs, current bauxite grades, market conditions, and the facility’s age as the main reasons for the closure of Kwinana refinery.

Aluminium plant of manufacturer Alcoa at Point Henry, near the regional city of Geelong in Victoria on Feb. 11, 2012. William West/AFP via Getty Images

The mineral sector in Western Australia (WA) has suffered a blow as alumina giant Alcoa announced a plan to shut down a major refinery in Kwinana, axing up to 1,000 jobs and leaving the local community’s future in doubt.

On Jan. 9, Alcoa revealed that the U.S.-based company would curtail production at a 60-year-old refinery in phases before closing it in 2025.

Alcoa cited operating costs, current bauxite grades, market conditions, and the facility’s age as the main reasons for the closure.

“Today’s curtailment decision comes only after thorough and careful deliberation, and we acknowledge that this action will impact workers, business partners, and the community,” said Alcoa’s executive vice president and chief operations officer Matt Reed.

The curtailment will begin in the second quarter of 2024, affecting around 800 employees and 250 contractors.

The company expected to bring the workforce down to 250 in the third quarter when all production stops.

While the refinery will no longer produce alumina in the later phases, some processes still need to continue until the third quarter of 2025, when the total headcount will be further reduced to 50.

The refinery’s annual production capacity is around 2.2 million metric tonnes, but it has only been operating at 80 percent capacity since January 2023.

Alcoa said the Kwinana refinery incurred a net loss (pre-tax and non-controlling interest) of US$130 million (A$194 million) in 2023 and predicted that the curtailment would save the company around US$70 million starting from the third quarter of 2024.

The company also announced support for impacted workers by helping them to transition to other jobs or redeploying them within its business.

“We remain committed to WA in the long term and will continue to assess options for the refinery, monitoring the factors that have led to the curtailment decision,” Mr. Reed said.

In addition, Alcoa stated that alumina production at its Pinjarra and Wagerup refineries would not be affected by the curtailment at Kwinana.

Government Disappointed With Alcoa’s Decision

Following Alcoa’s announcement, federal Resources Minister Madeleine King expressed her disappointment with the decision to curtail the Kwinana refinery.

“As the local member representing many of the workers at Alcoa Kwinana, I am extremely disappointed and my thoughts are with those workers and their families as they are the people most severely affected by this decision,” she said in a statement.

“We understand that Alcoa is faced with difficult considerations, including the age of the facility, a constrained location and challenging market conditions, however, the closure of such a longstanding operation is disheartening for everyone involved.”

The minister also expected the company to do everything it could to support impacted workers and their families during the transition period.

Echoing the sentiment, WA Premier Roger Cook said it was a difficult day for local workers in Kwinana.

“This is a very disappointing outcome, and Alcoa needs to do everything it can to support its workforce through this transition,” he said.

“We will continue to work with Alcoa to ensure its other operations in Western Australia—including its Pinjarra and Wagerup refineries—support local jobs into the future.”

Meanwhile, Minerals Council of Australia CEO Tania Constable blamed the Kwinana closure on the impact of energy shortages and government policies, including problematic industrial relations laws and complex approval processes.

“To allow such a strategic industry investor like Alcoa to close the doors on this significant refining capacity is a devastating blow to the Australian economy and proof of the enormous challenge the federal government faces in bolstering the nation’s downstream processing capabilities,” she said, as reported by the Financial Review newspaper.

“This is an alarming example of the cost to the economy, jobs, and our communities when poor policy settings combine to throttle productive businesses.”