The Multinational Monitor



How Kaiser and Rio Tinto Are Flooding Tasmania for Cheap Power

by Peter Thompson

On the island of Tasmania (population 420,000), an Australian state off the southeast coast of the continent, Comalco's Bell Bay aluminum smelter is big business. Comalco's after-tax profits amounted to nearly $A40 million for the last six months of 1980. Since Tasmania has only a handful of large industries, and unemployment is, relatively high in Australian terms (over six percent), multinationals like Comalco have significant-and currently controversial-economic leverage.

Comalco's presence in Tasmania goes back to 1955, when the Australian government established a homebased aluminum plant as a defense measure. A joint agreement between the national and the Tasmanian governments led to the building of a Comalco (Commonwealth Aluminum Company) smelter at Bell Bay (see map). The Australian government sold its shares in Comalco to CRA (Conzinc RioTinto of Australia, a British-based firm) and Kaiser Aluminum Inc. of California. The Tasmanian government retains only a small preference shareholding.

Comalco's present output at Bell Bay is 112,000 tonnes per annum, making it Australia's largest aluminum smelter-although competition for this title will soon pass to the present host of smelters being built in Victoria, New South Wales and Queensland.

The aluminum industry directly employs about 1300 Tasmanians. A recent Comalco study claimed that direct and indirect employment due to the Bell Bay plant totals 2,922 jobs. The same study states that the plant's output was worth $A188 million (U.S.$220 million)-or about six percent of Tasmania's gross domestic product.

Comalco's thirst for electricity-no matter the environmental costs-has created resentment in Tasmania. Comalco accounts for 40 percent of all electricity usage in the state, far outstripping the total residential sector use. The smelter employs only one half of one percent of the state's workforce.

The price which Comalco pays for its electricity is a state secret. Nevertheless, Tasmanian Premier Doug Lowe has suggested that Comalco pays only about 0.7 cents per kilowatt hour of electricity, representing an annual subsidy of $A6 million to Comalco, taken from the pockets of Tasmania's small power users and households.

The environmental costs of the hydropower projects which supply Comalco's electricity have also never been quantified. The Tasmanian Parliament sparked great public protest in 1969 when it approved the damming of Lake Pedder and subsequent flooding of the lake's scenic environs. The power plant built near the site provides less than 70 megawatts of additional power to Tasmania's electricity grid, all of which was contracted to Comalco and one other energy-intensive industry.

The loss of Lake Pedder and the adjoining Gordon River gorge (one of Australia's steepest chasms) led conservationists to redouble their efforts to save further areas of the southwest from flooding. Currently, government plans to dam the Franklin River, the last major wild river in Southeastern Australia, are being held up on environmental grounds after 80,000 of the state's 250,000 voters joined a letter-writing campaign to pressure the state legislators.

Despite the public outcry, Comalco continues to fight for the river's flooding. The company is 90 percent controlled by non-Australian firms, par,; for the course in most sectors of Tasmania's economy. Over 80 percent of mining, and 60 percent of manufacturing projects on the island are controlled outside Australia.

An excellent articulation of Tasmania's dilemma comes from the multinational's own Australian mouthpiece, Sir Roderick Carnegie, chairman of CRA:

"People don't realize the cost. If you get $2 in 1979 from overseas invested in equities, these owners want a dollar a year from 1980 onwards forever. What I'm saying is this: that's a very high price, but in political terms it doesn't seem a high price because they see the $2 coming in today, but in 10, 11, 12 years time, a dollar a year going out is an enormous price to pay . . . I think that at the present time the attitude is too often that we should continue our reliance on the international oil companies for a source of capital. That's an easy way but in the long term I don't think it's going to create the kind of jobs for young Australians which I want for my kids.
The Tasmanian economy has become a victim of the very process which Carnegie warns about.

Peter Thompson is the south-west Tasmania project officer for the Australian Conservation Foundation.

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