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Australia’s largest building materials manufacturer is considering moving production abroad if power shortages and price volatility continue.
The leader of the brick factory, Australia’s largest brick manufacturer, and Boral, the manufacturer of construction materials, evaluated the situation frankly.
According to Reuters, Brickworks has a gas contract with energy company Santos, which costs about $ 10 per gigajoul ($ 6.95) and has recently reached $ 40 per gigajoul ($ 27.82), and is now the government. The upper limit is set by.
In an interview, Brickworks Managing Director Lindsay Partridge said, “If you have to pay (at the current spot price) when a contract rolls over, you’ll definitely shut down the factory and move production abroad. It will be transferred. “
In comparison, the company pays only US $ 3 per gigajule in the United States.
“It’s a very simple equation to solve,” he added, adding that it would be cheaper for the company to manufacture in the United States and return the product to Australia.
Meanwhile, Boral has revealed that it has shrunk its business to cope with rising energy prices.
“We were forced to temporarily shrink part of our business and unfortunately had no choice but to give the increase directly to our customers,” CEO Zlatko Todorcevski told Reuters in an email.
“We also needed to accelerate our plans to consider overhead to offset these inflation challenges.”
Australia is tackling the energy crisis caused by the confluence of factors, including the surge in global gas demand caused by sanctions on Russia in response to the Ukraine War. A polar vortex that has boosted domestic demand for gas and electricity. Lack of readily available base load energy from coal-fired and gas-fired generators.
The unreliability of the latter is due to the focus on renewable energy sources, which lacks investment in maintaining existing coal-fired power plants and exploring new gas fields.
To deal with this situation, Australian Energy Market Operators (AEMOs) have relied on greater intervention in the market.
At the beginning of the month, AEMO set a price cap on wholesale electricity prices to reduce the cost of electricity to consumers.
However, generators are less profitable and have responded by simply withdrawing the availability of electricity at specific times. This has forced market regulators to intervene in some generators to generate 5,000 megawatts of electricity to avoid potential power outages in areas like Sydney. rice field.
A few days later, AEMO shut down the entire electricity market across the country. This could soon be replaced by a “capacity mechanism” designed by the Energy Security Commission.
Generators are not paid spot prices based on the amount of electricity they generate, but are paid to go into standby with available power.
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Daniel Y. Teng is based in Sydney. He focuses on national politics, including federal politics, COVID-19 response, and relations between Australia and China. Do you have a hint? Contact him at [email protected].
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