over the same period5? Canada and Russia increased metal processing consumption to 13% and 12% of all power consumed; Brazil, South Africa and the USA have decreased metal processing consumption as a percentage of total electricity consumed, partly because commercial and residential consumption have grown proportionately more than metals processing since 1990; and China increased metals processing consumption from 12% to 20% using 607TWh more in 2008 than in 1990. That’s a voracious appetite for metals processing and power by a labour-intensive country still developing its power infrastructure. In 1998 the Productivity Commission produced a report on the impact of microeconomic reform on the aluminium industry (Productivity Commission 1998). The report included the results from a survey of firms which indicated that environmental regulations including hazardous waste, air emissions, water emissions and land rehabilitation would have a negative impact on the industry (Productivity Commission 1998). A concern with environmental constraints would go some way to explaining the loss of market share to developing countries, but any business contemplating a long-term investment in a country would have
FIGURE 5: GROWTH IN ELECTRICITY CONSUMED FOR METALS PROCESSING Source: (IEA 2010), (IEA 2010)
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Image: NASA
to consider the risk of environmental constraints re-appearing as large developing economies mature. Despite the potential for environmental concerns, the oil shock of the 1970s and the prospect of a resources boom drove substantial investment in power infrastructure in Australia: Loy Yang in Victoria to service Alcoa’s aluminium plant at Portland; Eraring, Bayswater and Mt Piper to service the expected boom in New South Wales; Gladstone, Tarong and Callide to service Queensland’s projected requirements. Whilst the timing of those power stations may have initially resulted in excess capacity for the late 1980s and early 1990s, they have serviced, and continue to service, the power economy well. Although the public may have paid for at least some of that infrastructure by way of excess capacity and subsidised tariffs (Simshauser 2001), the benefit has been employment, investment and the funding of base-load power for the economy as a whole. Attracting resource-based investment to Australia has been good for the economy, increased employment and built an electricity backbone. In summary, China is not only providing affordable labour resources for manufacturing, it is also building its electricity backbone for capital intensive industry based on Australian resources. Australia can either lose capital- and powerintensive industries to developing countries where the power systems are still being developed or it can invest in a resilient, technologically advanced and competitive power economy that makes it logical to avoid the heavy costs of transporting ores across the globe. What would energy intensive industries require from the power economy to invest in Australia?
Electricity industry consumption data for India and Chile is not available or unreliable.
November 2011
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