Gas costs could sink more manufacturers after collapse of plastics ...
Mr Willox said the closure of ExxonMobil’s ageing Altona refinery in Victoria in 2021 dealt a blow to Qenos and many other businesses, and a major plant outage added to their problems.
“But most of all, the long-term rise in natural gas prices eroded Qenos’ competitiveness and its prospects. Prices rose over the past decade because of the take-off of LNG exports, the erosion of southern gas production, and the lack of adequate planning to manage these long-foreseen developments.”
Gas prices typically ranged between $3 and $5 per gigajoule before LNG exports from Queensland began, but have been around double figures on spot markets for long periods of time since, although cheaper gas has sometimes been available under contracts.
Spot gas in Victoria was $12.20/GJ on Thursday, while Santos said in its March quarterly report that its average realised price was $US6.68 ($10.28)/GJ, down from $US8.47 in the same quarter last year.
Qenos’ owners, property developer Logos, called in administrators McGrathNicol on Wednesday. The firm’s Jason Preston, who is leading the administration, said Logos had agreed to fund employee wages and entitlements, as well as the shutdown costs of the Botany plant while the future of the Altona plant is being determined.
Logos only bought Qenos from its former Chinese owners this year but has struggled to keep it afloat.
The government’s industry policy plans to protect and expand manufacturing have come under fire from orthodox economists who argue that they will lead to bad decisions.
Australian Industry Group chief executive Innes Willox. Alex Ellinghausen
But Mr Willox said the fact that Qenos had collapsed “just as the consequences of many years of inattention and lightweight policy are being felt” showed the need for active federal and state government policy.
“There is more pain to come, and it will not be confined to the 700 workers directly impacted by the Qenos closure. We need a co-ordinated response to the ripples of this closure, especially in the chemicals and packaging sectors; and a convincing long-term plan for reliable and affordable industrial energy,” Mr Willox said.
“All the states and the Commonwealth need to work together to halt further industrial decline.”
Qenos shed 150 jobs in 2021 after the closure of the ExxonMobil refinery, and lost $420 million over two years to 2021.
