Flinders Operations Announcement

Alinta Energy today announced its Flinders Operations in Port Augusta (Northern & Playford B Power Stations) and Leigh Creek (Leigh Creek Mine) will not operate beyond March 2018 (and may close earlier but not before March 2016) as its continuing operation had become increasingly uneconomic.

Alinta Energy CEO, Jeff Dimery said the company had communicated the closure decision with its employees and key stakeholders and was committed to working closely with the South Australian Government, the representative unions and local communities in Leigh Creek and Port Augusta to prepare for the cessation of the Flinders Operations.
“There are approximately 440 employees that will be affected by this difficult decision. Their welfare and that of their families is our highest priority at this time,” Mr Dimery said.

“All affected employees will receive their full entitlements and the company will provide additional support services to assist during this transition. It is anticipated that a total in the vicinity of $75 million in redundancy benefits and entitlements will be distributed to employees across the Flinders business.”

“Our decision to close the business has been made at the conclusion of a detailed strategic review during which we have consulted extensively and investigated a range of options with key stakeholders over recent months, including the South Australian Government.”

“Throughout the four and half years that we have been running the business we have investigated all possibilities to find a viable economic solution for its continued operation. During this period the company has incurred operating losses in the vicinity of $100 million whilst at the same time investing an additional $200 million to extend the operating life of the Flinders business.”

“The decline in demand for energy, as households have become more efficient and the number of industrial customers has declined, combined with policy settings designed to support significant growth in renewable energy generation have together had the effect of causing a significant oversupply of power available to South Australia.”

“We now believe that there can be no expectation that the Flinders business can return to profitability.”

The development of a closure plan in consultation with employees and other key stakeholders will commence immediately with some operational adjustments at the mine and power station required to support this decision over the near term. A timetable for the closure will be finalised based on further review of critical risks associated with extended operation, with a view to moving to an earlier closure date, not before March 2016, if circumstances warrant.

Mr Dimery said Alinta Energy would work collaboratively with Governments and the market operator to assist in the transition of its generating capacity out of the system.

Today’s announcement will have no impact on the supply of electricity to Alinta Energy’s residential and business customers.