BHP being battered by SA’s wind power obsession.
As an economy, South Australia is so far under water it’s drowning, not waving.
Battered by an erratic power supply and prices which have doubled in the last 12 months, South Australia’s few remaining industrial businesses are besides themselves.
Power policies a threat to nation: business chiefs
Matt Chambers and Andrew White
23 February 2017
The heads of some of the nation’s biggest companies have blasted the chaotic state of the power grid, saying renewables targets need to be curbed and baseload power developed to prevent job losses.
BHP Billiton chief executive Andrew Mackenzie, who took a $US105 million ($137m) cost hit at the Olympic Dam copper and uranium mine in South Australia after recent blackouts, says renewable energy schemes could raise costs and reduce power security while having no impact on emissions.
The head of the world’s biggest miner has warned that a long-term expansion of Olympic Dam may not go ahead if power security and costs are not addressed and that this will probably need carbon capture and storage if emissions cuts are also wanted.
“Let’s talk about affordability, reliability and emissions reduction, as opposed to having some secondary target about just having more renewables, which might deny you all three,” Mr Mackenzie said in London last night after releasing a first-half profit of $US3.2 billion ($4.15bn).
“We have lost $US100m in this period because of the intermittency of power in South Australia, and also we are facing more expensive electricity, frankly, than we budgeted for at this time last year.”
Mr Mackenzie warned the nation’s unreliable power infrastructure could stop a planned expansion of Olympic Dam.
He told investors that a proposed future doubling of the size of Olympic Dam to produce 450,000 tonnes of copper a year would not go ahead in the current situation.
“We would not look at a major expansion of Olympic Dam unless we can be confident we have a reliable and affordable source of power within South Australia,” Mr Mackenzie said.
Chief Scientist Alan Finkel is reviewing the nation’s energy security following blackouts in South Australia and Victoria last year and as states embark on their own renewable energy targets.
The federal government’s renewable energy target was also attacked because it discouraged cleaner coal and gas plants.
Mick McCormack, the chief executive of the country’s biggest pipeline operator APA, said the gas to improve the capacity and reliability of the grid was available but that it needed governments in Victoria and the Northern Territory to end moratoriums on conventional and coal-steam gas.
“This is an issue about getting more gas to market,’’ he said.
Mr McCormack was “gobsmacked” that the energy debate had returned to coal-fired power when there was an estimated 600 megawatts of gas-fired generation capacity sitting idle while limited supplies of the fuel were sucked up for export markets out of Gladstone in Queensland.
“There has been no energy policy co-ordination between the states and the feds,’’ he said.
“The states have pursued energy policy on their own without regard for the overall system, and without having a discussion about what is good for Australia and what we expect from our energy policy.’’
Caltex chief Julian Segal said the nation needed to decide whether it wanted heavy industry, or that industry would decline. “If you say we want to have heavy industry in this country, there needs to be a recognition that energy is the most important ingredient of that and, therefore, reliable and low-cost energy is absolutely essential for that type of industry. The alternative is that whatever we have left will be diminished even more,’’ he said.
BHP’s head of Australian mining, Mike Henry, said short-term measures were required, on top of longer-term ones being looked at by Professor Finkel’s review.
BHP Billiton is not alone in suffering from South Australia’s wind power calamity. Cement maker, Adelaide Brighton has also had it’s fair share of what attempting to run on sunshine and breezes means for business.
Power costs and disruptions hit firm’s bottom line
Verity Edwards and Michael Owen
24 February 2017
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.
Jay Weatherill reckons that there is “no future in coal”. With the imminent closure of Victoria’s Hazelwood and the loss of its 1,600 MW of reliable base-load power, Weatherill is about to learn just how dependent South Australians are upon coal.
Since the closure of the Port Augusta plant in May last year, South Australia has critically depended upon coal-fired power from Victoria delivered via two interconnectors. As wind power output collapses every day in South Australia (and sometimes for days on end – see above), it’s Victorian coal-fired power that keeps the lights on in SA.
For someone whose state enjoys the highest power prices and the least reliable power supply in the Nation, Jay Weatherill demonstrates a species of cynical audacity that would put Robert Mugabe to shame.
As winter looms, with Hazelwood out of the supply equation, we can’t wait to see his take on 1.6 million South Australians sitting freezing in the dark when the wind stops blowing (or blows too fast) and Victoria (selfishly) determines to keep its remaining coal-fired power on its side of the border.
Then there is the small issue of South Australia’s generating costs, which are already triple those of coal powered Victoria. But, no doubt, Jay has got an answer for that too?
Welcome to your wind powered future!