On the factory floor of an aluminium plant in Melbourne’s north, the noise of a massive extrusion press is deafening.
It is the sound of what the director of Australia’s largest aluminium manufacturing company, Capril Aluminium, said is one of the country’s most important industries.
“Aluminium is one of Australia’s largest industries, and it’s Australia’s largest manufactured export in terms of dollars, so it’s very, very important to the Australian economy,” Capril’s director Tony Dragicevich said.
But uncertainty has filtered down supply chains and production lines across Australia’s $18 billion aluminium industry.
The AWU’s Tom Mortimer says all of Australia’s aluminium smelters would feel the impact of Trump’s tariffs. (ABC News: Michael Nudl)
US President Donald Trump has proposed a 25 per cent tariff on all aluminium and steel imports into America by March 12.
Prime Minister Anthony Albanese said Australia seeking an exemption was under consideration after what he described as a ‘constructive’ call to Trump.
Australian Workers’ Union national policy director Tom Mortimer said the impact of the proposed tariffs would be first felt by Australia’s four aluminium smelters at Boyne Island in Queensland, Tomago in New South Wales, Portland in Victoria and Bell Bay in Tasmania.
“Australia sells about 80 to 85 per cent of all primary aluminium that we produce overseas, which means that ultimately these sorts of decisions impact all of them,” Mr Mortimer told 7.30.
Dumping fears
Alcoa’s aluminium smelter in Portland, Victoria. (Supplied: Alcoa)
Mr Dragicevich, who is also on the board of the Australian Aluminium Council (AAC), said the proposed tariffs are “unsettling”.
He’s concerned about how Trump’s tariffs could disrupt global trade flows and increase the potential for China to dump cheaper aluminium in Australia.
“Dumping of aluminium is when a country subsidises the manufacture of aluminium, which enables its manufacturers in their country to sell overseas at a price that’s below the world price and below the cost of manufacture,” he said.
Mr Dragicevich said if countries like China, which is the world’s largest aluminium producer, are shut out of the US market because of the Trump administration’s tariffs they will look for other markets to sell their products.
Inside the Tomago Aluminium smelter in New South Wales. (ABC Newcastle: Anthony Scully)
“That would have a serious impact for our industry,” Mr Dragicevich told 7.30.
If the tariffs go ahead he believes the federal government will need to put anti-dumping measures in place to protect domestic manufacturers.
“Those measures really take the form of either dumping duties or setting a floor price to ensure that the aluminium that does come into the country comes in at a fair market will-buy price,” he said.
“Without those measures in place, it would become a free-for-all and local aluminium extruders — which we’re one of six — would find it really, really difficult to compete on price against the Asian suppliers, particularly China.”
Australia ‘killing our aluminium market’
Trump’s senior trade adviser Peter Navarro blamed Australia for hindering the US aluminium market. (Reuters: Kevin Lamarque)
White House senior advisor on trade and manufacturing Peter Navarro said Trump’s proposed tariffs will take America back to the “golden age of steel and aluminium”, and singled out Australia as “killing our aluminium market”.
According to the AAC about 10 per cent of Australia’s aluminium exports head to the US, making up just 2.5 per cent of aluminium imports into the American market.
Timna Tanners, a metals analyst at Wolfe Research in New York, told 7.30 “I don’t know what he’s referring to. We don’t see those products get flooded in”.
Metals analyst Timna Tanners says the US tariff on aluminium is “strange”. (Supplied)
“Peter Navarro has historically been an expert on the steel side, and an advocate for the steel industry but I don’t know if that experience extends to the aluminium industry,” she said.
“The US putting tariffs on aluminium is a little strange. The US is net short of aluminium to the tune of about 50 per cent of its needs.“
Mr Dragicevich senses change is underway but how it shapes Australia’s aluminium industry is yet to be known.
“It’s a big contributor to jobs, over 20,000 jobs in Australia, and it’s an industry that we think has a great future providing we don’t we don’t have unfair competition in this market,” Mr Dragicevich said.
“Once the tariffs are in place and the market settles down, it’s probably going to take three to six months before we see what the impact of those trade flows are.”
Ms Tanners anticipates movement in trade negotiations and exemptions for some countries ahead of Trump’s March 12 tariff deadline.
“I think there should be carve-outs for primary aluminium because the US doesn’t produce it, and it would be pretty inflationary and has already begun to be for aluminium,” she said.
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