10
Feb

‘Key piece’: Loss of Altona refinery sparks wider manufacturing warning

ExxonMobil’s move to shut its Melbourne fuel refinery has sparked a warning about the impact on other major manufacturers who rely on its products.

United Workers Union national secretary Tim Kennedy said workers were set to attend a meeting at 10am to hear the Altona plant will close, leaving Australia with just two refineries.

Mr Kennedy said there were 260 workers employed at the site and many specialised contractors who depended on it.

“The effect is a bit more significant than that. It is a key piece of Melbourne’s and Victoria’s and Australia’s advanced manufacturing structure,” Mr Kennedy said.

Mr Kennedy said major manufacturers such as Qenos relied on products from the Altona refinery and would now likely have to source that material from China, which was less reliable.

In a statement, ExxonMobil the refinery was no longer “economically viable” and would be converted to an import terminal following a review.

“We are grateful for the tremendous efforts by our employees to improve the viability of the operation,” said Nathan Fay, chairman of ExxonMobil Australia.

“We extend our thanks to the federal government for the significant support offered to Altona and other refineries. Our decision to convert our facility to a terminal is not a reflection of those efforts.”

In 2010, Australia had seven refineries and will now have just two after ExxonMobil’s move on Altona followed BP Australia’s decision to shutter its Kwinana site in Western Australia.

The announcements mean the number of refineries operating in Australia will have halved since last year’s federal budget unveiled a $2.3 billion support program amid concern about the nation’s fuel security. That budget scheme was accelerated in December with funding brought forward by six months.

At the time, Energy Minister Angus Taylor said the strategy would create 1000 jobs.

On Wednesday, Mr Taylor said the decision to close the refinery was “extremely disappointing”.

“ExxonMobil has made clear that the impacts of COVID-19, declining crude production and other commercial factors have significantly impacted their earnings, leading to today’s decision,” he said.

Mr Taylor said the closure will not affect Australian fuel stockpiles and that the government was supporting the sector through JobKeeper to maintain operations and protect jobs.

He said the government support package would boost “onshore diesel stocks and protect motorists and industry from future higher fuel prices”.

“The government will continue to work with the sector to support Australia’s refining capability and fuel security, which will support our farmers, miners and truckies into the future,” he said.

Mr Kennedy said the support could not make up for the lack of plans for energy and for advanced manufacturing and the fact that BP and ExxonMobil had both decided not to take it up showed it was insufficient.

“It’s lazy thinking and reckless with taxpayer money, it is kicking the can down the road,” he said.

Mr Kennedy said it was likely the plant would close in about October as ExxonMobil looked to quickly focus its attention elsewhere in its global operations.

Some workers might secure redeployment into ExxonMobil’s upstream oil operations but the future for those businesses, including in Bass Strait, was not bright either, he said.

“This company has made it quite clear it doesn’t see a future in Australia,” he said. “The oil component will run down to dry in Bass Strait in five years.”

Construction of the Altona refinery began in 1946 and it commenced operation in 1949.

ExxonMobil had not publicly stated whether it would seek support from the government to keep the plant open.

The two remaining refineries are Viva Energy’s plant in Geelong, which is signed up to the government’s support scheme, and Ampol’s site at Lytton in Queensland.

Mr Kennedy said he believed Lytton was also likely to close and declined to comment on the prospects for the Viva plant in Geelong.

A parliamentary library report published in December noted local refineries were “relatively small and old and have to compete against larger and more efficient refineries in the Asian region”.

The report also noted there were concerns in some quarters that the loss of refining capability could leave Australia vulnerable to supply disruptions.

Local federal Labor MP Tim Watts said the news was a “jobs disaster” and questioned whether local chemical businesses that relied on the refinery would now be under a cloud.

Extracted from The Age