From the TUC

Alcan plant to close: The price for inaction on energy

16 Nov 2011, by in Labour market

On the day that North East unemployment hit 11.6% and UK youth unemployment broken through the 1 million mark, Alcan announced that it is to close its aluminium smelter in the region, with the loss of over 500 jobs. The company cites the UK’s high energy costs.

The TUC and unions in the industry have been warning Government about this risk for two years. The Alcan smelter in Lynemouth, Northumberland,  is the county’s biggest private sector employer. It has been a mainstay of good quality and well paid employment for 40 years in an area still working hard to recover from the devastating closure of deep coal mines. Sited just two miles away from Ashington, once known as Europe’s biggest pit village, Alcan has made a considerable contribution to the local economy during the toughest of times.

The owners, Rio Tinto, have issued redundancy notices to the smelter’s 515 workers having failed to find a new buyer. But Alcan is not just another victim of a slowing global economy or a growth-free Great Britain. There is a wider policy and political context.

The smelter at Alcan is one of many Energy Intensive Industries that has increasingly anxious about the industrial implications of the Government’s carbon tax. Faced with the prospect of having to use its annual £40 million profit from the smelter to pay new levies, the plant’s future was increasingly uncertain. As a multinational corporation, Rio Tinto has the ability to hop, skip and jump across the globe to locate and invest in any country in the world – including those with far weaker carbon emission regulations than in the UK.

Chief Executive of Rio Tinto Jacynthe Côté directly attributed blame to Government policy-making:

“This decision follows a thorough strategic review which explored every possible option for continuing to operate the smelter and power station. However, it is clear the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation.”

Elsewhere steel, ceramics, glass, paper, minerals and chemical firms are calculating the impact on their business plans and projects. Together they employ 225,000 people in the UK. Just 12 days away from George Osborne’s Pre-budget Report there are growing demands from industry for greater certainty and in particular relief against the carbon floor price for the sector. Earlier this month the Energy Intensive Users Group wrote to the Secretary of State asking for the Government to ‘provide energy intensive businesses with as much investment certainty as possible, through a comprehensive package of measures that recognise UK businesses and sectors exposed to carbon leakage.’

The TUC has always supported a carefully managed ‘just transition’ to a lower carbon economy. To the workers in Lynemouth this is far from just. The Government has no time to lose and must adopt a balanced package of support than enables Energy Intensive Industries to take that transition to a lower carbon economy. It must push ahead to create more green manufacturing jobs to harness and increase the progress and powers of a Green Investment Bank. If they do not then the 515 ordinary working people in Northumberland will soon be joined by many thousands of others across the UK. It is too high a high price to pay for inaction in Westminster.