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Gas supply crisis far from over for manufacturers - 18 April 2017

Chemistry Australia is calling for the Prime Minister and Australian gas suppliers to recognise that the gas crisis is far from over, and to ensure that tomorrow’s meeting focuses on the needs of the entire domestic market, including industrial users.


“It’s taken a crisis to highlight the critical importance of gas through the economy,” said Samantha Read, CEO of Chemistry Australia.

“But it’s crucial there isn’t the view that the crisis is over.

“The outcome we need from tomorrow’s meeting is the same confidence of short- and long-term supply for Australian industrial users, as the residential sector.

“The industrial sector is Australia’s largest user of gas, and all Australians benefit from having a strong and viable manufacturing industry. It underpins our competitive advantage, provides gainful and skilled employment for a significant proportion of the community, and helps to attract further investment and growth in the economy.

“Lack of supply will hollow out the Australian manufacturing sector. In fact, it is happening right now.

“Our members in the Australian chemistry industry are experiencing unprecedented supply uncertainty, along with 30 to 50 per cent price increases in new gas contracts. Domestic industrial users are being asked to pay more than export prices, which seriously undermines the viability of their operations.

“Companies have already been scaling back their Australian operations. Worse still, others are considering relocating their facilities to offshore markets where gas supply is more reliable and affordable. These companies are taking with them the skilled jobs and value add that are critical to the economic health and wealth of our country.

“Until gas supply meets the needs of the entire domestic market, including industrial users, we face a landscape bereft of investment and viability. There needs to be a commitment to continued non-partisan action with cooperation from industry, to deliver short and long term solutions to this crisis.

“This is a crisis that has been building over many years. In 2014, the Deloitte Access Economics Report forecast losses of $118 billion in manufacturing output and 14,500 jobs between 2014 and 2021 in net present value terms. This scenario is now materialising, it is here and now. This is an unacceptable situation considering our significant advantage in natural resource reserves.

“Gas is particularly essential to the business of chemistry. It’s important for process energy, and it is also a non-substitutable ingredient for advanced manufacturing.

“The Australian chemistry industry uses 10% of Australia’s domestic gas for its molecular properties to create a huge range of products essential to our everyday lives. These include fertilisers for our crops; cleaning products for health and hygiene in our homes and hospitals, and smart packaging to keep our food fresher for longer.

“The long-term solution is to bring on new supply, from more suppliers, into a well-functioning market. We support the ACCC’s recommendation for a case by case assessment for gas exploration, to ensure the responsible development of gas reserves. States need to urgently reassess their moratoria,” said Ms Read.

 

Chemistry Australia Media contacts:
Krista Imberger – kimberger@chemistryaustralia.org.au or 0439 318 290
Claire Selby – cselby@chemistryaustralia.org.au or 0448 028 876
 

Chemistry Australia is the pre-eminent national body representing the $40 billion Australian chemistry industry, one of the largest manufacturing sectors in the country. The industry employs more than 60,000 people and contributes more than $11.6 billion to GDP in industry value add. Members of Chemistry Australia are positioned across the entire value chain including manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, fabricators, compounders, recyclers, research, academia and service providers to the industry. These businesses range from small family-owned companies to leading national and multinational enterprises.

 

 

 

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