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Alcoa Nod Nets $484m by Brett Foley Herald Sun, May 31, 2006

THE controversial contract to supply energy to Alcoa's Portland and Port Henry aluminium smelter has delivered the Victorian Government an unexpected $484 million windfall.

As revealed in BusinessDaily yesterday, the spiralling price of aluminium on global commodity markets meant the Government would make a gain on the 30-year contract for the first time since 1989, when it netted a more modest gain of $46 million.

The controversial deal, which has delivered power to Alcoa's smelters at an aggregate loss of about $2 billion, was signed by the Cain Labor government in 1984.

Aluminium prices were trading at below $US2000 a tonne a year ago but have surged to more than $US3100 a tonne this month. The Alcoa deal is based on an aluminium price of $US1800 a tonne.

Victorian Treasurer John Brumby said if the world aluminium price remained above that level, the Government would cease paying energy subsidies to Alcoa.

Mr Brumby said the deal would form part of negotiations with Alcoa about whether it would expand its Victorian facilities.