Australia has a once-in-a-generation opportunity to secure critical chemical manufacturing capability by ensuring domestic manufacturers have access to affordable natural gas under long-term contracts.

Affordable, secured domestic supply would enable Australia's only methanol manufacturing plant in Melbourne to re-start which was forced into care and maintenance in 2016 after it was unable to secure long-term gas supply contracts despite decades of successful operation. The plant requires approximately three petajoules of gas annually and could be fully operational within 18 months of securing a competitive long-term gas agreement.

Methanol is far more than an industrial chemical. It is a foundational ingredient in the homes Australians live in, the furniture they use, the fuels of the future, and the critical minerals supply chains that underpin modern technology. Access to affordable long-term domestic gas is essential if Australia is to manufacture these products locally to build the economy’s resilience.

"Australia faces a clear choice: continue exporting our resources and importing the products made from them or use a portion of our gas to create value here at home. With affordable domestic gas and effective reservation policies, we can secure chemical and industrial manufacturing, support critical industries and build our resilience to operate in a disrupted world," Mr Grant Lukey CEO Coogee Chemicals said.

"The closure of Australia's only methanol plant was not caused by a lack of demand. It was caused by a lack of access to affordable, long-term domestic gas. When LNG exports started in Gladstone, Queensland, manufacturers like us simply could not secure the gas contracts required to keep operating, despite having produced methanol in Australia for nearly two decades."

“Restarting local methanol production would strengthen supply chain resilience and reduce dependence on overseas suppliers, supporting the housing industry and critical minerals while enabling local jobs and manufacturing capability.”

“Domestic methanol can be delivered directly to domestic manufactures who need a consistent and reliable volume. An example of a past customer who was forced into oversees supply agreements with our closure is Borg Group. This company makes the kitchens, flooring cladding and structural elements for Australian homes through their products and methanol is a fundamental input for them. The more secure their supply chain, the more local products they can produce for housing.

“Like many of our former customers, the economic amplifier of our plant being re-commissioned is huge – a few dozen jobs at our plant are supporting over 500 at theirs.

“Overall, this is a great investment, if we can restart the mothballed methanol plant in Victoria, it will create new jobs, skills, and technology for a major Australian manufacturer and the housing industry, a priority sector for the Australian government.

“The lesson from the past decade is clear: when domestic industry cannot access competitively priced gas on long term contracts, we put Australia on life support for critical chemicals that underpin our major industries of agriculture, mining, housing and medical.”

A study by Chemistry Australia illustrated that domestic chemical manufacturers create 80 times more jobs and more than 30 times more value from one petajoule of natural gas than the LNG exports who are exporting raw gas alone.

Australia possesses abundant natural resources, world-class industrial expertise and growing demand for critical chemicals and minerals. What has been missing is a reservation policy that directs gas back to the value-adding chemical manufacturing sector. The critical element in any reservation policy is the need for producers to actually supply the gas, rather than just offer the gas. This provides the essential certainty to manufacturers that the gas will be in the market.

The case for domestic chemical manufacturing is compelling.

With the right long-term gas supply framework, Australia can build its industrial resilience, attract billions of dollars in new investment, and create the foundations for a stronger, more resilient economy.

“Affordable domestic gas is not simply an energy policy issue. It is a nation building policy for jobs, manufacturing, critical minerals, critical chemical and national economic security.”