Alcoa fires broadside over costs
The head of Alcoa's Australian operations has bluntly said what most believe is at the core of the mining sector's productivity woes, describing Australia's industry as having become "fat, lazy and happy" and in real danger of losing out to projects in developing countries.
Speaking yesterday at a corporate breakfast in Perth which explored the impact of the resources sector on WA's economy, Alcoa of Australia chief executive Alan Cransberg said the increasing high cost of doing business in the country was a constant sticking point.
"I think we've become fat, lazy and happy about the fact that we're good at digging holes," he said.
"As people go into Africa, as China explores more, as Russia opens up different territories, some of those raw material markets for us that we've taken for granted may not be there."
Alcoa itself has not been immune to rising costs in Australia despite owning highly competitive WA refineries - at Pinjarra, Wagerup and Kwinana - and bauxite mines in the Darling Range. Alcoa's Victorian smelters are under review for possible closure and two months ago reported an 81 per cent slump in full-year profitability across its Australian business unit.
Asked after the breakfast about the future for Alcoa's WA operations, which employ about 4000 people, Mr Cransberg said the State was not "immune" to a pull-back in alumina output.
"In any business you have to earn your right to get investment and to operate," he said. "In WA - and Victoria - we've done a lot of work to take costs out of our business because with the commodity prices we have continually got to be at the lower end of the cost curve . . . and I'm really proud of our workforce here. But it's actually tougher than the global financial crisis at the moment. If you remember during the GFC, for us our commodity prices came down, but the currency came down. Now, although it has recovered somewhat, we have both."
I think we've become fat, lazy and happy about the fact that we're good at digging holes.
"Alan Cransberg
