Power costs and disruptions hit firm’s bottom line

//Power costs and disruptions hit firm’s bottom line

Power costs and disruptions hit firm’s bottom line

24 February, 2017

Verity Edwards & Michael Owen

Courtesy of the Australian

One of South Australia’s largest power users has taken a $13 million hit to its bottom line because of rising energy costs, with the September statewide blackout costing it $9m alone.

Adelaide Brighton Cement, which employs 450 people, was forced to shut for almost 36 hours in September and refire a 1500C furnace at its Osborne plant in Adelaide’s north.

Chief executive Martin Brydon yesterday blamed $9m of increased costs in the 2016 full-year report on market disruptions causing production losses, reduced sales and higher electricity and gas prices.

“What we’re saying is it’s not unreasonable to expect reliability of electricity supplies,” Mr Brydon said.

He said the company had considered installing gas-fired turbines to produce its own power, but it was uneconomical because of construction costs and the price and availability
of gas.

“One of the issues we’re looking at in South Australia is whether there was enough gas, and you’ve got to get enough to run it,” he said. “We could build and put a gas turbine generator on our own site, that would be the only way, but you’d have to have economically viable gas to buy.”

Adelaide Brighton Cement made a $186m profit, down $21.6m from 2015.

Mr Brydon said the company tried to reduce costs by using alternative fuels, trading on the electricity market and cutting or increasing production, depending on times of demand.

South Australian Energy Minister Tom Koutsantonis said he sympathised with industry and the government was looking at ways to encourage new generators into the market to increase competition.

But earlier yesterday Premier Jay Weatherill rejected concerns from South Australia’s biggest employer, BHP Billiton, about its ongoing viability in the state.

BHP Billiton, the state’s biggest energy user, which operates the massive Olympic Dam copper, uranium and gold mine in the far north, warned that a long-term expansion may not go ahead if power security and costs were not addressed.

The miner lost $137m because of the September blackout and has suffered further losses in several other blackouts, due in part to South Australia’s wind-reliant grid.

Mr Weatherill poured scorn on BHP Billiton chief executive Andrew Mackenzie’s concerns: “It’s a coal company, of course he would say that. Let’s put this in context: they do have a dog in this fight, they have an interest in protecting the coal industry. There is no future in coal.”

Opposition energy spokesman Dan van Holst Pellekaan said supply disruptions and the state’s over-reliance on renewables was having a massive financial impact on businesses.

2017-02-24T10:30:30+11:00 February 24th, 2017|