A new power station for south western Victoria will be among the offers to multinational Alcoa when federal and Victorian industry ministers Greg Hunt and Wade Noonan fly to New York on Monday in an emergency bid to secure the future of Portland's damaged aluminium smelter.
The ministers will meet with Alcoa's global chief executive Roy Harvey as concern mounts about the dire economic impacts should the region's biggest employer – crippled recently by a massive power outage – close for good.
![Alcoa's Portland was crippled recently by a massive power outage.](/web/20161221043225im_/http://www.theage.com.au/content/dam/images/g/p/v/b/g/z/image.related.articleLeadwide.620x349.gtdayl.png/1481964938417.jpg)
Mr Hunt confirmed that while immediate assistance measures to restart the plant would be a priority, longer term options for power to the electricity-guzzling smelter would also be tabled.
"We will be working with all involved to find a sustainable power solution and have worked in deep co-operation with the Victorian government and the company to that effect," Mr Hunt told The Sunday Age.
![Concern is mounting about the dire economic impacts should the region's biggest employer close for good.](/web/20161221043225im_/http://www.theage.com.au/content/dam/images/g/t/8/b/b/t/image.related.articleLeadwide.620x349.gtdayl.png/1481964938417.jpg)
He said this could include funding from the federal Clean Energy Finance Corporation to help finance a new power station for the smelter and the region. The Sunday Age understands such a plant would likely be gas fired.
Mr Noonan said the governments owed it to the Alcoa workers, their families, and the people of Portland "to do all we can to fix this situation".
"Despite this [outage] setback, we believe the smelter is still a viable asset for the people of Portland and Victoria. This is a unique difficulty, not a question mark over the facility itself."
An $810 million and 550 megawatt gas power station built by Origin Energy at Mortlake in the south west has operated since 2012. It was designed to generate up to 550 megawatts of power.
![Environment Minister Greg Hunt confirmed immediate assistance measures to restart the plant would be a priority.](/web/20161221043225im_/http://www.theage.com.au/content/dam/images/g/t/9/7/c/c/image.related.articleLeadwide.620x349.gtdayl.png/1481964938417.jpg)
The plant was built to allow expansion of capacity. It is not clear if this is what Mr Hunt has in mind as the option for a new power station.
The Alcoa plant is believed to have lost more than $1 million a day since the outage led to the closure of a potline and more than half the plant's output.
![Power lines leading to the smelter in Portland.](/web/20161221043225im_/http://www.theage.com.au/content/dam/images/g/t/8/b/b/u/image.related.articleLeadwide.620x349.gtdayl.png/1481964938417.jpg)
Last week The Sunday Age revealed that workers at the plant had be asked to help cut costs and save their jobs by taking unscheduled holidays over Christmas and into the New Year.
At the time, industry sources estimated an assistance package was likely to cost federal and state taxpayers tens of millions of dollars.
![Wade Noonan said the governments owed it to the Alcoa workers, their families, and the people of Portland "to do all we ...](/web/20161221043225im_/http://www.theage.com.au/content/dam/images/g/t/d/d/3/2/image.related.articleLeadwide.620x349.gtdayl.png/1481964938417.jpg)
But that package would likely be considerably more if the federal government was to contribute substantially to a new power plant, and if an ongoing state subsidy is required.
The power supply to the huge complex went out for more than five hours on December 1, causing molten aluminium in more than 200 smelting pots to cool and solidify.
This crippled an entire potline, one of two such potlines used to smelt aluminium. The other has been working on limited capacity for some time. Alcoa closed potlines as it worked to stabilise the second pot line and investigate the damage to the first.
The ministers are hoping for an Alcoa announcement about the plant before Christmas, if not during their 24-hour trip to New York.
AWU state secretary Ben Davis welcomed the cooperation between the two levels of government.
"It is very important that both the state and federal governments meet with Alcoa this week," he said.
Mr Davis said if the Portland smelter closed it would have a "devastating impact" on south-western Victoria.
The smelter is Victoria's largest single exporter. It directly employs about 680 full-time staff and contractors at Portland, a city of only 10,000. About 2000 jobs rely on the operation.
But it has been controversial ever since the Hamer government in the 1970s opted to build it 500 kilometres from the state's electricity hub in Latrobe Valley, and the Cain government struck a power contract that turned into an effective subsidy costing Victorians billions of dollars.
The company's bottom line had already been hit this year by the conclusion of that subsidy and an increase in power prices following the closure of Hazelwood power station.
Early this year Treasurer Tim Pallas ruled out renewing the electricity subsidy deal.
But the power outage and the enhanced threat of the smelter closing has strengthened Alcoa's bargaining position its ongoing push for government support.
It is understood there are also separate negotiations this week between Alcoa and power company AGL over a new power supply contract, which could be crucial to the smelter's future.
At the time of last month's outage electricity provider AusNet was undertaking routine maintenance work on one of the two high-voltage transmission lines that carry electricity 500 kilometres from Latrobe Valley.
While this happened, the remaining transmission line failed, causing an outage in the smelter that also left 200,000 homes without power in Adelaide.
At the time Alcoa's director of corporate affairs, Brian Doy, said the outage was "certainly the worst incident" at Portland Aluminium that he could recall.
While a legal stoush over the costs of the outage is expected, it is not clear which parties will be involved or how much compensation would be sought.
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