GLENCORE REFINERY GAS BOOST
Vital supply contract for refinery after watchdog steps in
GAS critical for Townsville’s copper refinery has been secured after inquiries by the competition regulator, saving hundreds of jobs.
The Australian Competition and Consumer Commission will today release an interim report into the gas market revealing a complaint from Glencore over its failure to secure gas could have led to the closure of the refinery.
Treasurer Scott Morrison raised the matter during a visit to Mount Isa, saying it was “baffling” the gas needed by the refinery could instead be sold offshore.
GAS critical for the operation of Townsville’s copper refinery has been secured after inquiries by the competition regulator, saving hundreds of jobs.
The Australian Competition and Consumer Commission will today release an interim report into the gas market revealing a complaint from Glencore over its failure to secure gas could have led to the closure of the refinery.
Federal Treasurer Scott Morrison raised the refinery’s plight earlier this year during a visit to Mount Isa, saying it was “baffling” the gas needed by the refinery could instead be sold offshore, causing a domino effect of job losses in Townsville and Mount Isa.
Australia’s largest electricity generator AGL holds a half share in the Moranbah Gas Project Joint Venture and North Queensland Energy Joint Venture which supplies Glencore’s Townsville refinery.
AGL is seeking to sell its half share in the venture to a consortium involving China’s Shandong Order Gas Company.
Glencore had been unable to strike a new long- term gas supply agreement with AGL and the refinery faced closure with the loss of 200 jobs with further impacts on Mount Isa operations unless an agreement could be struck before the end of the year.
A spokesman for AGL yesterday confirmed the parties had signed a new gas supply agreement on November 24 but said it was not at the intervention of the ACCC.
The spokesman said AGL was actively engaged in dealing with the issue and under- stood the importance of the supply but that its negotiations with joint venture partner, Arrow- Shell, took time.
Sources say the three- year deal will provide gas at a substantially cheaper rate and will save hundreds of manufacturing jobs in North Queensland.
In September, Glencore released a statement saying it was disappointed it had been unable to progress a gas supply agreement despite negotiations lasting 18 months.
Sources told the Bulletin they believed AGL was wanting to sell its gas assets without a long- term contract attached and that Shandong had ex- pressed interest in developing export facilities.
The ACCC report says one user – understood to be Glencore – raised concerns with it over attempts to recontract supply for its plant with the sole supplier in the location, the North Queensland Energy JV, jointly owned by AGL Energy Ltd and North QLD Merchant Pty Ltd.
“Initially a contract for firm resupply for the forthcoming period was not offered to the user, which may have resulted in the plant shutting down,” the report says. “After the ACCC made inquiries of the JV, an offer was made to the user.”