Alcoa has told US investors that delayed approvals to extend its bauxite mining in WA will cost about $240 million in 2023, but more stringent environmental standards would help maintain community support so it can keep mining South West forests for another few decades.
Its refineries south of Perth will produce less alumina at a higher cost until it gains permission to mine areas of jarrah forest with higher-grade ore.
Alcoa chief executive Roy Harvey said the hold-up was not due to the introduction of new regulatory requirements, but the amount of information provided to regulators had increased with rising expectations of environmental protection, and that took time to prepare.
“Because of how critical Western Australia is to Alcoa … we thought it would make sense from a risk mitigation standpoint really just to step back, give ourselves a little bit of extra time,” Harvey told Wall Street analysts last week.
Alcoa’s business is the three steps of producing the metal aluminium: mining bauxite, turning that ore into alumina, then smelting it to make aluminium.
WA is the foundation of the $12.8 billion American company in the first two activities, providing 75 per cent of Alcoa’s bauxite and 71 per cent of its alumina in 2022.
The assets US-listed Alcoa operates in Australia are owned by Alcoa World Alumina & Chemicals, which it owns 60 per cent of, with ASX-listed Alumina Limited holding the remaining 40 per cent.
The increased costs of more than $25 million a month will mount from April until Alcoa’s rolling five-year mining and management program receives its annual approval by a committee of state government departments and is signed off by Minister for State Development Roger Cook.
The financial setback comes after Alcoa lost an estimated $US25 million ($36 million) when it curtailed production at its Kwinana alumina refinery by 30 per cent due to a recent gas shortage.
Approval sought for another decade of mining
Beyond 2023 Alcoa has a longer-term challenge to gain environmental approval to clear more than 9000 hectares of forest to supply about five million tonnes a year of bauxite to its Kwinana and Pinjarra alumina refineries and export an additional 2.5 million tonnes of the ore a year.
Chief executive Harvey called the proposal before the WA Environmental Protection Authority a “full-blown review” of how Alcoa will extend its Huntly mine into the new areas of Myara North and Holyoake for a decade from 2025.
In November 2022, the EPA requested Alcoa supply a swathe of additional information including considering if mining the new areas was consistent with the “ongoing ecological integrity of the northern jarrah forest.”
The UN Intergovernmental Panel on Climate Change in 2022 said the northern jarrah forest faced a high risk of significant transition or collapse without changes to management practices.
Wilderness Society WA campaigns manager Patrick Gardner said it was encouraging that the EPA had added assessments of the carbon storage capacity of the forest, protection of mature forest and cumulative impacts to the work required to gain approval.
“So we really need to think about what is best for this ecosystem: the guidance from the IPCC, or a state agreement that was developed when JFK was still alive?” Gardner said, referring to the original deal that allowed Alcoa to start mining in WA in 1963.
Harvey said he was confident Alcoa could gain the approvals it needed to operate its three WA refineries “for another few decades.”
“Everything is lined up, we have the right people working on it, and I think we have the support of our host government,” he said.
Gardner said the same factors that drove the decision to end native forest logging – the drying climate and reduced regeneration capacity of native forests – were also playing out in the bauxite-rich northern jarrah forests.
“The wide-scale destruction from the logging, clearing, burning and mining of bauxite is only accelerating these impacts,” he said.
Worsley Alumina, WA’s other bauxite miner owned by South32, also has a proposal before the EPA to significantly expand its footprint which includes clearing more than 7000 hectares of forest.
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Source: Thanks smh.com