Glencore is threatening to shut down North Queensland copper operations

 
  Sulla1 Chief Commissioner

The ABC and Townsville Bulletin are both reporting Glencore has written to the Federal and State governments threatening to shut down copper mining and smelting at Mt Isa and refining in Townsville over the cost of energy and rail operations, threatening 2000 North Queensland jobs. Glencore's copper transport contract shifted from Aurizon to PN in February.

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  bevans Site Admin

Location: Melbourne, Australia
The ABC and Townsville Bulletin are both reporting Glencore has written to the Federal and State governments threatening to shut down copper mining and smelting at Mt Isa and refining in Townsville over the cost of energy and rail operations, threatening 2000 North Queensland jobs. Glencore's copper transport contract shifted from Aurizon to PN in February.
Sulla1

https://www.railpage.com.au/news/article-24419/

Is Glencore now complaining about the cost of rail freight being provided by PN?  Please.
  Sulla1 Chief Commissioner

I suspect the rail cost component Glencore is complaining about is QR's access charges...which impacts PN's freight rates. The Queensland Government gets to pocket a nearly 20% profit margin from the Mt Isa line, and I guess if that profit was no longer a cost to operators, then access charges would be nearly 20% less-ish.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
I suspect the rail cost component Glencore is complaining about is QR's access charges...which impacts PN's freight rates. The Queensland Government gets to pocket a nearly 20% profit margin from the Mt Isa line, and I guess if that profit was no longer a cost to operators, then access charges would be nearly 20% less-ish.
Sulla1
Glencore's main gripe is the gas situation which has become a very serious non-joke across the eastern seaboard and another legacy of Anna Bligh in setting up the CSM gas industry too quickly.

Right now the gas exporters from Gladstone don't have enough gas from their own wells and they are literally sucking gas from all over the Eastern gas network to supply their commitments OS, so much so some areas have gas going backwards. Gas users are seeing horrific rises in gas prices and in some cases only one supplier is willing to make an offer or as Glencore have found themselves, none.

I have a friend in the O&G business and he said its so serious that he has heard whispers that Vic govt has looked at the option to have the interstate connector closed to protect themselves from being raped of gas by the Exporters in Qld. In NSW, they don't even know if Sydney can survive a very cold winter without running out of gas if not this year, unlikely next year. Meanwhile we have coal fired power stations closely or planned to be closing and being replaced with gas.

Legally I'm not sure what the Fed govt can actually do and cannot do. But we all know if many other gas rich countries were paying more (a hell of alot more) for gas than our customers in Japan there would be an outcry and the govt would simply say STOP and reset prices to previous levels with guaranteed domestic supply.

Alan Jones has been going off on this on radio for some time now and calling for a gas reservation policy which occurs in WA, ie any domestic customer who wants gas can get it and the price is reasonable for the customer and profitable for the supplier, anything left is up for export.

Honestly if you wound the clock back 8 years and said Australia's East Coast will run out of gas you would be laughed out of the room. The Feds need to step up to the plate and now and sort this out before we loose more manufacturing, both supply and price.
  fzr560 Chief Train Controller

I suspect the rail cost component Glencore is complaining about is QR's access charges...which impacts PN's freight rates. The Queensland Government gets to pocket a nearly 20% profit margin from the Mt Isa line, and I guess if that profit was no longer a cost to operators, then access charges would be nearly 20% less-ish.
Glencore's main gripe is the gas situation which has become a very serious non-joke across the eastern seaboard and another legacy of Anna Bligh in setting up the CSM gas industry too quickly.

Right now the gas exporters from Gladstone don't have enough gas from their own wells and they are literally sucking gas from all over the Eastern gas network to supply their commitments OS, so much so some areas have gas going backwards. Gas users are seeing horrific rises in gas prices and in some cases only one supplier is willing to make an offer or as Glencore have found themselves, none.

I have a friend in the O&G business and he said its so serious that he has heard whispers that Vic govt has looked at the option to have the interstate connector closed to protect themselves from being raped of gas by the Exporters in Qld. In NSW, they don't even know if Sydney can survive a very cold winter without running out of gas if not this year, unlikely next year. Meanwhile we have coal fired power stations closely or planned to be closing and being replaced with gas.

Legally I'm not sure what the Fed govt can actually do and cannot do. But we all know if many other gas rich countries were paying more (a hell of alot more) for gas than our customers in Japan there would be an outcry and the govt would simply say STOP and reset prices to previous levels with guaranteed domestic supply.

Alan Jones has been going off on this on radio for some time now and calling for a gas reservation policy which occurs in WA, ie any domestic customer who wants gas can get it and the price is reasonable for the customer and profitable for the supplier, anything left is up for export.

Honestly if you wound the clock back 8 years and said Australia's East Coast will run out of gas you would be laughed out of the room. The Feds need to step up to the plate and now and sort this out before we loose more manufacturing, both supply and price.
RTT_Rules
Is this a good time to ask what separates a first world country from a third world country? I was reasonably confident that we were in the first group but recent events make me wonder. IIRC the aluminium smelter at Portland are provided with assistance from the state government so any large employer/large energy user would be foolish not to try their luck. I don't remember voting for this insanity.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Is this a good time to ask what separates a first world country from a third world country? I was reasonably confident that we were in the first group but recent events make me wonder. IIRC the aluminium smelter at Portland are provided with assistance from the state government so any large employer/large energy user would be foolish not to try their luck. I don't remember voting for this insanity.
fzr560
This is what happens when you let ideology dreaming get in the way of practical commonsense. Focus on ensuring low cost energy security, the reason the bulk of our large industry is actually here and then consider adding the green tinge.
  Nightfire Minister for Railways

Location: Gippsland
I suspect the rail cost component Glencore is complaining about is QR's access charges...which impacts PN's freight rates. The Queensland Government gets to pocket a nearly 20% profit margin from the Mt Isa line, and I guess if that profit was no longer a cost to operators, then access charges would be nearly 20% less-ish.
Glencore's main gripe is the gas situation which has become a very serious non-joke across the eastern seaboard and another legacy of Anna Bligh in setting up the CSM gas industry too quickly.

Right now the gas exporters from Gladstone don't have enough gas from their own wells and they are literally sucking gas from all over the Eastern gas network to supply their commitments OS, so much so some areas have gas going backwards. Gas users are seeing horrific rises in gas prices and in some cases only one supplier is willing to make an offer or as Glencore have found themselves, none.

I have a friend in the O&G business and he said its so serious that he has heard whispers that Vic govt has looked at the option to have the interstate connector closed to protect themselves from being raped of gas by the Exporters in Qld. In NSW, they don't even know if Sydney can survive a very cold winter without running out of gas if not this year, unlikely next year. Meanwhile we have coal fired power stations closely or planned to be closing and being replaced with gas.

Legally I'm not sure what the Fed govt can actually do and cannot do. But we all know if many other gas rich countries were paying more (a hell of alot more) for gas than our customers in Japan there would be an outcry and the govt would simply say STOP and reset prices to previous levels with guaranteed domestic supply.

Alan Jones has been going off on this on radio for some time now and calling for a gas reservation policy which occurs in WA, ie any domestic customer who wants gas can get it and the price is reasonable for the customer and profitable for the supplier, anything left is up for export.

Honestly if you wound the clock back 8 years and said Australia's East Coast will run out of gas you would be laughed out of the room. The Feds need to step up to the plate and now and sort this out before we loose more manufacturing, both supply and price.
RTT_Rules
There are even rumors that Victoria Is to Import LNG from the likes Qatar !

Nothing short of politicians from both sides of the fence asleep at the wheel.
  james.au Chief Commissioner

Location: Sydney, NSW
ensuring low cost energy security
RTT_Rules

Nuclear
  james.au Chief Commissioner

Location: Sydney, NSW
I suspect the rail cost component Glencore is complaining about is QR's access charges...which impacts PN's freight rates. The Queensland Government gets to pocket a nearly 20% profit margin from the Mt Isa line, and I guess if that profit was no longer a cost to operators, then access charges would be nearly 20% less-ish.
Sulla1

Does QR use DORC regime like the ARTC has to with the DIRN?
  Sulla1 Chief Commissioner

It's a requirement of the Queensland Competition Authority. Here's a link regarding the DORC for the Western Line...

http://www.qca.org.au/getattachment/d4a9582c-6ccf-47bd-b0f3-3c9fe33f1fad/qca-b-h-report-on-western-system-costs-and-assets.aspx
  james.au Chief Commissioner

Location: Sydney, NSW
It's a requirement of the Queensland Competition Authority. Here's a link regarding the DORC for the Western Line...

http://www.qca.org.au/getattachment/d4a9582c-6ccf-47bd-b0f3-3c9fe33f1fad/qca-b-h-report-on-western-system-costs-and-assets.aspx
Sulla1

Thanks Sulla.  Bedtime reading..!
  neillfarmer Chief Train Controller

It's a requirement of the Queensland Competition Authority. Here's a link regarding the DORC for the Western Line...

http://www.qca.org.au/getattachment/d4a9582c-6ccf-47bd-b0f3-3c9fe33f1fad/qca-b-h-report-on-western-system-costs-and-assets.aspx
Sulla1
A really interesting read, should be mandatory for all the armchair critics.
Neill Farmer
  Sulla1 Chief Commissioner

The latest news from the Townsville Bulletin, suggesting concentrate  (not anodes if the smelter closes) could be exported. Glencore produces around 1-million tonnes of copper concentrate per annum from Mt Isa and Earnest Henry, all of which is currently smeltered in Mt Isa and then refined in Townsville.

http://www.townsvillebulletin.com.au/news/thousands-of-jobs-at-risk-across-north-queensland/news-story/83097faa43dfdeae750ca83eb3fed6ac
  freightgate Minister for Railways

Location: Albury, New South Wales
Not a nice company.
  neillfarmer Chief Train Controller

Most of the cost pressures on Glencore lie at the feet of the successive Labor State Governments. Failing to reserve a supply of gas for local industry, stripping every $ possible out of the State owned electricity generators including transfers of state debt to them, over building the transmission system to rort the tariff calculation and charging exorbitant fees for rail access.
The flow through effects of the SA and Vic brown coal power plant closures are yet to be known but industry people are predicting wholesale electricity prices to rise by about 15%.
  Fatty Assistant Commissioner

Location: Melbourne
Interesting that the Sunmetals zinc refinery, less than 5 km from the Glencore copper refinery, is installing a $174 million solar plant to offset their energy costs. You have to wonder why Glencore aren't doing the same for their two copper plants if they're serious about energy costs being such a burden. Sunmetals are sourcing the lowest cost electricity by making it themselves. Glencore are running to the government and media whinging. I reckon they are either looking for excuses to close the under performing plants or trying for reduced freight rates and energy subsidies from the government.
  james.au Chief Commissioner

Location: Sydney, NSW
In Chile, BHP have built/are building their own power plant and their own water distillation plant to provide their needs.  Their view is that they need these things to make money out of the copper deposits, and the government isn't in a position to provide these, but it makes sense to do it themselves.  Sunlmetals seems to have come to the same conclusion.

Really, it does throw up the question, what is government really responsible for?  

Is this just Glencore going on a rent seeking (aka subsidy seeking) exercise for its own benefit?
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Interesting that the Sunmetals zinc refinery, less than 5 km from the Glencore copper refinery, is installing a $174 million solar plant to offset their energy costs. You have to wonder why Glencore aren't doing the same for their two copper plants if they're serious about energy costs being such a burden. Sunmetals are sourcing the lowest cost electricity by making it themselves. Glencore are running to the government and media whinging. I reckon they are either looking for excuses to close the under performing plants or trying for reduced freight rates and energy subsidies from the government.
Fatty
A few things
1) The lowest cost energy source is NOT PV solar. they are going down this path because it works for them. A copper smelter uses more power per tonne and runs 24/7 and hence it is very much unlikely they could adsorb the extra cost, certainly an aluminium smelter cannot nor does it work around the clock.

2) Its the 21st century in a developed country flush with gas and coal, if you cannot get reliable power and gas from the state grid at affordable prices then what sort of country is this? In India even small factories make their own gas from coal gasification and larger plants make their own power usually from coal because its the only way to get reliable power.
  Fatty Assistant Commissioner

Location: Melbourne
1) The lowest cost energy source is NOT PV solar. they are going down this path because it works for them. A copper smelter uses more power per tonne and runs 24/7 and hence it is very much unlikely they could adsorb the extra cost, certainly an aluminium smelter cannot nor does it work around the clock.
RTT_Rules
This is not true. For new installs PV solar is now the cheapest option. The "sun doesn't shine 24 hours" argument is rubbish too. There's a good write up how Glencore made a poor choice on energy supply here: http://reneweconomy.com.au/if-glencore-wants-cheap-energy-for-mt-isa-it-should-go-solar-25999/.

Glencore had the opportunity to connect directly to the Kidston wind, solar, hydro storage plant but went for their own gas turbine for generation. Now they're having a whinge due to poor decision making.

2) Its the 21st century in a developed country flush with gas and coal, if you cannot get reliable power and gas from the state grid at affordable prices then what sort of country is this? In India even small factories make their own gas from coal gasification and larger plants make their own power usually from coal because its the only way to get reliable power.
RTT_Rules

It is the 21st century in a modern country so why persist with 18th century technology when better alternatives exist?
  Fatty Assistant Commissioner

Location: Melbourne
In Chile, BHP have built/are building their own power plant and their own water distillation plant to provide their needs.  Their view is that they need these things to make money out of the copper deposits, and the government isn't in a position to provide these, but it makes sense to do it themselves.  Sunlmetals seems to have come to the same conclusion.

Really, it does throw up the question, what is government really responsible for?  

Is this just Glencore going on a rent seeking (aka subsidy seeking) exercise for its own benefit?
james.au

Glencore already have their own power supply in Mt Isa. They chose a gas turbine and have been caught out by gas prices that have risen sharply due to a number of factors. Electricity is available to them from the government network but they are baulking at the price. Rent seeking is exactly what it is. They're looking for government hand outs to counteract their poor investment choices.
  james.au Chief Commissioner

Location: Sydney, NSW
In Chile, BHP have built/are building their own power plant and their own water distillation plant to provide their needs.  Their view is that they need these things to make money out of the copper deposits, and the government isn't in a position to provide these, but it makes sense to do it themselves.  Sunlmetals seems to have come to the same conclusion.

Really, it does throw up the question, what is government really responsible for?  

Is this just Glencore going on a rent seeking (aka subsidy seeking) exercise for its own benefit?

Glencore already have their own power supply in Mt Isa. They chose a gas turbine and have been caught out by gas prices that have risen sharply due to a number of factors. Electricity is available to them from the government network but they are baulking at the price. Rent seeking is exactly what it is. They're looking for government hand outs to counteract their poor investment choices.
Fatty

As part of the power plant in Chile, BHP also secured the supply chain that it was dependent on, i.e. they went to source to make sure they had all their ducks in a row.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
1) The lowest cost energy source is NOT PV solar. they are going down this path because it works for them. A copper smelter uses more power per tonne and runs 24/7 and hence it is very much unlikely they could adsorb the extra cost, certainly an aluminium smelter cannot nor does it work around the clock.
This is not true. For new installs PV solar is now the cheapest option. The "sun doesn't shine 24 hours" argument is rubbish too. There's a good write up how Glencore made a poor choice on energy supply here: http://reneweconomy.com.au/if-glencore-wants-cheap-energy-for-mt-isa-it-should-go-solar-25999/.

Glencore had the opportunity to connect directly to the Kidston wind, solar, hydro storage plant but went for their own gas turbine for generation. Now they're having a whinge due to poor decision making.

2) Its the 21st century in a developed country flush with gas and coal, if you cannot get reliable power and gas from the state grid at affordable prices then what sort of country is this? In India even small factories make their own gas from coal gasification and larger plants make their own power usually from coal because its the only way to get reliable power.

It is the 21st century in a modern country so why persist with 18th century technology when better alternatives exist?
Fatty
Your misguided in your comments.

For northern Qld there is no reliable 24/7, low cost RE power supply. Hydro is very limited to only a handful of locations, IF you are allowed to build and you won't. Wind is extremely unreliable in the north and sun doesn't work between 4pm and 8am.

Glencore built a GT because they were being supplied gas at commercial rates of return that justified conversion from coal. To have gas denied in preference to export because of poor decision making by the govt is absurd. What next, sorry not BBQ gas as we are going to export that too?

We are a developed modern economy with hundreds of years of gas and coal reserves, we should not have issues with supply of either.

PV solar is only economic for small scale domestic and commercial for mostly self consumption, not feeding the grid. As soon as you go to install it on large scale in industrial applications the costs rise dramatically. Yes costs are dropping rapidly, but again the 24/7 issue has yet to be resolved as battery technology is still lagging.

....
I'm sorry but please show me where there is a published article that low cost industrial scale fusion energy has been successfully commercialised, if not can get back to reality as in the real world we have real peoples jobs at risk who need to buy real food and other basics of living with the real money they will earn.

Also since when is a GT 18th century technology, it was invented until the later half of the 20th century and likewise super critical coal generation.
  Fatty Assistant Commissioner

Location: Melbourne
Your misguided in your comments.
RTT_Rules
No, I am not. Did you bother to read the article I posted above? (and it's you're BTW)

For northern Qld there is no reliable 24/7, low cost RE power supply. Hydro is very limited to only a handful of locations, IF you are allowed to build and you won't. Wind is extremely unreliable in the north and sun doesn't work between 4pm and 8am.
RTT_rules
Are you serious? No reliable wind? You know very little about NQ it appears. Once again. the "no sun during the night" argument doesn't wash as there are already solutions available. Connecting their Mt Isa smelter to the grid would have been a start as it would have isolated them from the spike is gas prices.

Glencore built a GT because they were being supplied gas at commercial rates of return that justified conversion from coal. To have gas denied in preference to export because of poor decision making by the govt is absurd. What next, sorry not BBQ gas as we are going to export that too?
RTT_Rules

Glencore built a gas turbine based on forecast gas prices and got it spectacularly wrong. Now they're having a cry about it. Yes, the gas market is problematic and has been messed up by both levels of government.

I'm sorry but please show me where there is a published article that low cost industrial scale fusion energy has been successfully commercialised, if not can get back to reality as in the real world we have real peoples jobs at risk who need to buy real food and other basics of living with the real money they will earn. Also since when is a GT 18th century technology, it was invented until the later half of the 20th century and likewise super critical coal generation.
RTT_Rules

There's already zero carbon solutions pushing aside fossil fuels without the need for fusion. Burning dinosaurs is 18th century technology whichever way you look at it.
  jmt Deputy Commissioner

In Chile, BHP have built/are building their own power plant and their own water distillation plant to provide their needs.  Their view is that they need these things to make money out of the copper deposits, and the government isn't in a position to provide these, but it makes sense to do it themselves.  Sunlmetals seems to have come to the same conclusion.

Really, it does throw up the question, what is government really responsible for?  

Is this just Glencore going on a rent seeking (aka subsidy seeking) exercise for its own benefit?
"james.au"


If you had spent any time in Antofagasta or Calama you would have observed that all recent (post 1990) large scale mining operations are based on pumping seawater up the Andes. In Northern Chile miners are responsible for providing their own electricity. The area has an average annual rainfall of between  4 and 8mm. Without mining the area would be uninhabited. The Guggenheim interests back in the 1920's had to establish coal powered generators at Tocopilla to allow Chuquicamata to be fully developed

The entire desert area is crisscrossed with privately owned HT lines, gas pipelines, as well as seawater and slurry pipelines. A lot of electricity and gas comes in from Bolivia. This area would give an Australian inner suburbs greenie apoplexy. In Northern Chile the supply of electricity and water (even in inhabited areas) is not seen as the States responsibility, so using Escondida as an example is missleading.
  james.au Chief Commissioner

Location: Sydney, NSW
In Chile, BHP have built/are building their own power plant and their own water distillation plant to provide their needs.  Their view is that they need these things to make money out of the copper deposits, and the government isn't in a position to provide these, but it makes sense to do it themselves.  Sunlmetals seems to have come to the same conclusion.

Really, it does throw up the question, what is government really responsible for?  

Is this just Glencore going on a rent seeking (aka subsidy seeking) exercise for its own benefit?


If you had spent any time in Antofagasta or Calama you would have observed that all recent (post 1990) large scale mining operations are based on pumping seawater up the Andes. In Northern Chile miners are responsible for providing their own electricity. The area has an average annual rainfall of between  4 and 8mm. Without mining the area would be uninhabited. The Guggenheim interests back in the 1920's had to establish coal powered generators at Tocopilla to allow Chuquicamata to be fully developed

The entire desert area is crisscrossed with privately owned HT lines, gas pipelines, as well as seawater and slurry pipelines. A lot of electricity and gas comes in from Bolivia. This area would give an Australian inner suburbs greenie apoplexy. In Northern Chile the supply of electricity and water (even in inhabited areas) is not seen as the States responsibility, so using Escondida as an example is missleading.
jmt

Whilst I was mainly Santiago based, i did spend some time in the area and have seen precisely what you describe.  And yes agreed, I was using BHP as an example people could relate to, but no, I disagree, its not misleading.  Fact is, as you state, companies have been providing their own power for quite a while, and not expecting government to do it.  Though there is some coordination through the energy market, where generators provide and consumers take it out of the network (like our AEMO)

Re seawater, this is somewhat new and is providing problems in the leeching process (i.e. the harshness on gear, e.g. at Sierra Gorda).  There are some aquifers out there that have been used as water sources by companies over time, sometimes to the detriment of the aquifer.  Hence desal plants are on the up given their economic and environmental/political benefits.

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