Tomago Aluminium chief executive Matt Howell has backed up comments from one of the smelter's owners who said Australian aluminium manufacturing would be lost unless the price of reliable power comes down.
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Mr Howell confirmed the smelter, which directly employs 1100 people, was operating well below capacity due to the cost of power.
"I can't say the exact amount but I can confirm it is not insignificant," Mr Howell said.
Rio Tinto chief executive Jean-Sebastien Jacques warned this week that the future of energy intensive manufacturing industries, such as aluminium smelting were in jeopardy due to the high cost of energy.
Mr Jacques said the company was involved in urgent discussions with state and federal governments about how to reduce the cost of energy for Australian manufacturing industries.
Tomago's viability is dependent on having access to affordable and reliable electricity 24 hours a day, 7 days a week.
Despite advances in renewable technology, thermal energy sources - those produced by coal, gas or nuclear generators - remained the only viable energy option for the smelter's needs.
"We are seeing more wind and solar coming into mix, but the fact is the wind doesn't always blow and the sun doesn't always shine. When we need that energy, it has to come firmed," he said.
He said battery technology was not an option for supplementing the smelter's energy needs.
"To be honest, batteries are just expensive toys," he said.
"The largest battery in Australia would run this smelter for less than 8 minutes."
In addition to the loss of a multi-billion industry, the closure of Australian aluminium smelters would also have a significant environmental cost.
"There are certainly other places in the world that manufacture aluminium, but the environmental controls in those places are much lower than they are here," Mr Howell said.
Aside from its economic value, Tomago and related manufacturers had an essential role in maintaining the stability of the electricity gird.
The smelter's contract with AGL allows it to draw 950 megawatts from the grid when operating normally.
However, the smelter, which uses 12 per cent of the state's electricity, voluntarily reduced its energy consumption by a third in June 2018 in order to ensure an estimated 750,000 homes did not lose power.
The power shortage occurred because of shutdowns at the Bayswater, Liddell and Vales Point power stations, as well as restrictions on the transfer of electricity from Victoria.
Matthew Kelly
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
