By JOHN VAN KLAVEREN
ALCOA is using hardship provisions to terminate a long-term multi-million dollar deal to buy electricity for its Pt Henry smelter from AGL.
But AGL has disputed the hardship claim, arguing Alcoa has no right to terminate the contract.
Alcoa has issued a Supreme Court writ against AGL seeking a declaration that the termination notice is valid, with a hearing scheduled later this month.
The Point Henry smelter has been under a cloud since Alcoa announced a review of the operation in February last year.
Alcoa managing director Alan Cransberg said when announcing the review that the “unprofitable” smelter was unlikely to be “competitive in the foreseeable future”.
The six-month review resulted in a $42 million government bailout of the plant to safeguard 600 jobs for two years.
Alcoa claimed the hardship provisions were triggered if producing aluminium at the smleter “becomes uneconomical”.
The company said the contract called for 90 days’ negotiation, with Alcoa allowed to terminate the deal if the parties were unable to reach agreement.
Alcoa said the parties negotiated four times in March last year without a resolution.
Alcoa said it issued a termination notice on 27 March this year but AGL countered the notice was too late.
An Alcoa spokesperson confirmed the company was trying to terminate the contract with AGL Loy Yang from August 2014.
The termination would not affect Alcoa’s ability to operate the smelter or to secure another electricity supply, the spokesperson said.
US-based Alcoa this week posted a 59 per cent jump in profit, indicating an upswing in the aluminium industry.
