WA Premier Roger Cook's core "Made in WA" election policy will be tested by his use of local content provisions to keep Chevron's WA engineers working in WA.
Alcoa spruiks profit boost if mining more WA forest approved
The US miner expects WA government approval within 12 months to destroy 75 square kilometres of jarrah forest to enable its "number one" lever to boost profits.
US miner Alcoa has told investors that expanding its strip mining into new areas of jarrah forest near Perth is its main lever to boost corporate profits.
Alcoa chief executive Bill Oplinger told Wall Street in February that he expects the WA government to approve an expansion of its Huntly mine, which feeds bauxite to the Pinjarra alumina refinery, by the first quarter of 2026.
Instead, it has mined areas with lower ore grades, which increases its costs and cuts production of alumina, the feedstock for aluminium smelters.
"It's important to remember, the bauxite quality that we're running today is bauxite that we literally threw away five years ago," Oplinger said.
However, the company, which in 2024 mined 72 per cent of its bauxite in WA, is still competitive.
Currently, Alcoa's cost to produce both bauxite and alumina is in the cheapest 25 per cent of global production. Its alumina production cost may drop out of the "first quartile" until it moves to the new area, according to a recent company presentation.
The expansion into Holyoake and Myara North will be assessed by the EPA.Image: Alcoa.
Oplinger said mining the new area, which he expects to start as early as 2027, would raise the average alumina content in the bauxite Alcoa mines from 27.5 per cent to 32 per cent.
"It has massive knock-on impacts," he said, describing it as the "number one" lever the global company has to boost earnings.
Oplinger estimated the mine approval could lift production from its Pinjarra and Wagerup alumina refineries by up to one million tonnes a year.
This would increase revenue by $US472 million ($750 million) a year based on the alumina price Alcoa received in the December 2024 quarter. Reduced costs applied to all production would further boost the bottom line.
Pittsburgh-based Alcoa now fully owns the Australian operations it manages after buying its 40 per cent joint venture partner ASX-listed Alumina Limited in 2024.
The transaction increased the proportion of Alcoa's activities in the early stages of the aluminium value chain - mining and refining - as opposed to the subsequent smelting.
"That's been a really smart move," Oplinger said.
"I think that (in) the value chain, most of the value over time will accrete closer to the ore body and the refining than necessarily in smelting."
Two weeks later, Alcoa chief financial officer Molly Beerman reiterated to investors the importance of the mine expansion.
"When we complete those mine moves no earlier than 2027, we will pick up additional alumina volume as well as have a lower cost per tonne, so that's the most sizable improvement we have," she said.
The expansion, which would destroy 75 square kilometres of jarrah forest, will be assessed by the WA Environmental Protection Authority before new environment minister Matthew Swinbourn makes a decision.
Beerman said the approval process was progressing well, and she expected Alcoa's environmental review documents to be released for public comment early in the June quarter.
As well as risks to water quality, threats to biodiversity and Alcoa's failure to fully rehabilitate any of the 280 square kilometres of the jarrah forest it has strip-mined over six decades will attract significant interest.
Beerman said regulators were checking Alcoa's mining and rehabilitation daily and giving "very favourable feedback" to the company.
As well as assessing Alcoa's proposed expansion, the EPA will also consider the environmental effects of much of its current mining after the independent authority accepted a referral from environmental group WA Forests Alliance.
It is expected Alcoa will release environmental review documents for its expansion and its existing mining at the same time.
I worked in oil & gas in commercial and engineering roles for 20 years. Since 2016 I have written for The West Australian, The Saturday Paper, RenewEconomy, Michael West, Boiling Cold and WAtoday.
Peter Milne
