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    AGL modelling says Hunter power plant and aluminium smelter could close

  • China Aluminium Network
  • Post Time: 2014/8/21
  • Click Amount: 419


    Gas giant AGL says it is basing forward modelling on conservative assumptions that a newly acquired Hunter Valley power plant and the Tomago Aluminium smelter near Newcastle could close within three years.

    AGL has finalised its $1.5 billion acquisition of Macquarie Generation, but highlights several risks in a briefing to the stock exchange.

    It values the Bayswater power plant near Muswellbrook at $780 million, but says the Liddell plant is worth nothing.

    It says conservative modelling shows the Tomago aluminium smelter shutting in 2017 and as a result the Liddell power plant would close the same year.

    But AGL says there are many strategic benefits for its assets and plans to upgrade them.

    The company says it intends to spend $405 million over four years on revised maintenance to reverse deteriorating availability at its Liddell and Bayswater plants.

    That work would ensure Bayswater's future until 2035 and allow Liddell to operate until the end of its technical life in 2022, on the proviso the Tomago smelter stays open.

    CEO of AGL Michael Fraser says the conservative assumption about the closure of Tomago in 2017 is a worst case scenario, and it is hoped the facility will continue operating.

    "That's only an assumption," he said.

    "In fact when we look at where they sit in the global aluminium cost stack, we think it's more likely to stay open than close.

    "But to be conservative in how we valued the asset and negotiated the price, we just assumed that it would close."

    While talking about key risks AGL elaborates on a power supply contract with Tomago Aluminium which is due to end in 2017.

    AGL says Tomago has foreshadowed the possibility of the early renegotiation of contracts for the smelter or its closure post 2017.

    Tomago Aluminium's CEO Matt Howell has told the ABC he has no comment.

    Source: www.abc.net.au
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