Orica CEO Warns Gas Strategy Won't Save Manufacturing Unless Prices Fall
The CEO of Orica, a major explosives manufacturer, has warned that the federal government's gas strategy will do little to help Australia's struggling manufacturing industry unless it caps gas prices at globally competitive levels.
Sanjeev Gandhi, CEO of Orica, stated that the current gas price cap of $12 per gigajoule has effectively become a minimum price, making it difficult for manufacturers to compete. He pointed out that Orica can obtain gas for less than $4 in North America, highlighting the significant price disparity.
Gandhi emphasized that unless the government addresses these pricing issues, particularly for gas retailers, the future of Australian manufacturing is at risk. He cited numerous factory closures in recent years due to a lack of competitiveness, creating a domino effect throughout the industry.
The Orica CEO's concerns come as the government prepares to unveil its Future Made in Australia manufacturing blueprint in the upcoming budget. While Orica is on track to meet its emission targets, Gandhi expressed concerns about policy uncertainty beyond 2030, as the company seeks to transition to green hydrogen or ammonia as a raw material.
Analyst Criticizes Gas Strategy, Calls for Focus on Renewables
Clean Energy Finance analyst Tim Buckley described the government's gas announcement as "bizarre" and contradictory to its decarbonization goals. He argued that the strategy demonstrates the power of the gas lobby and called for a focus on renewable energy sources instead.
Buckley disputed the government's claim that the policy is necessary to avoid economic damage from a sudden shift away from gas. He emphasized that Australia's gas use is declining and will continue to do so, playing a diminishing role in the economy.
The gas policy announcement has caused division within the Albanese government, with several Labor backbenchers criticizing the decision. They argue that the government should prioritize the energy transition and set a clear timeline for phasing out fossil fuels.
Despite the concerns, there is progress being made on renewable energy sources. The government is fast-tracking renewable energy projects, and the share of renewables in the electricity grid is increasing.