{"id":490341,"date":"2026-02-19T14:57:12","date_gmt":"2026-02-19T14:57:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/490341\/"},"modified":"2026-02-19T14:57:12","modified_gmt":"2026-02-19T14:57:12","slug":"high-energy-costs-prevent-australia-from-moving-up-the-value-chain","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/490341\/","title":{"rendered":"High energy costs prevent Australia from moving up the value chain"},"content":{"rendered":"

Soaring energy costs have contributed to Australia\u2019s declining manufacturing sector, which is the smallest in the OECD as a share of GDP.<\/p>\n

\"Manufacturing<\/p>\n

Alex Joiner, chief economist at IFM Investors, illustrated the manufacturing sector\u2019s energy problem in the following chart:<\/p>\n

\"Energy<\/p>\n

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Natural gas input costs in manufacturing have increased by 186% since 2000, while electricity prices have risen by 181%.<\/p>\n

A July 2025 research note<\/a> from the Australian Industry Group (AiG) warned that heavy manufacturing\u2014particularly metals and petrochemicals\u2014is suffering most acutely from soaring gas costs.<\/p>\n

\u201cThese manufacturers consume around half of Australia\u2019s domestic gas supply, and their need for heat and chemical feedstocks cannot be substituted for lower cost electricity supply\u201d, AiG noted.<\/p>\n

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\u201cSurging energy costs must often be borne on the balance sheet, greatly reducing the profitability of energy-intensive branches of manufacturing\u201d.<\/p>\n

A June 2025 analysis<\/a> of ASIC insolvency figures showed that more than 1400 manufacturers nationwide had failed over the first two years of the Albanese government.<\/p>\n

Among these failures was Incitec Pivot, a large fertiliser company, which closed most of its Australian operations due to rising energy costs.<\/p>\n

Qenos, Australia\u2019s last major plastics manufacturer, shut down in 2024 due to high energy prices, leaving the country entirely reliant on polymers imported from China.<\/p>\n

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Oceania Glass, Australia\u2019s last architectural glass manufacturer, shuttered in February last year after 169 years of operation, citing rising energy costs and Chinese dumping.<\/p>\n

Orica, the world\u2019s largest producer of mining explosives, chemicals, and agricultural fertilisers, and BlueScope Steel have threatened to downsize their Australian operations and relocate to the United States in response to rising energy prices.<\/p>\n

Australia is awash with rare earths and minerals, as illustrated below:<\/p>\n

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\"Country<\/p>\n

However, high energy costs have made it uneconomic to process these in Australia and move up the value chain.<\/p>\n

Last week, Albemarle\u2019s lithium refinery in Western Australia\u2019s Southwest was placed on care and maintenance<\/a> (i.e., shut down), with about 275 jobs expected to be affected.<\/p>\n

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Mining commentator Tim Treadgold blamed high energy costs for the closure.<\/p>\n

\u201cSadly, it was predictable because the projects, any processing projects we have in Australia, have become uncompetitive\u201d, he said.<\/p>\n

\u201cWe\u2019ve got a very high-cost energy system in Australia, and we simply can\u2019t process the minerals at a price competing, say, with China, which has very low-cost energy\u201d.<\/p>\n

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\u201cIt\u2019s just such a basic issue that we\u2019ve gone down the road of driving energy prices higher in the belief that eventually renewables will be able to compete with coal and uranium and nuclear power and things like that\u201d, Treadgold said.<\/p>\n

While Western Australia\u2019s gas price is significantly lower than the East Coast\u2019s due to its 15% reservation scheme, costs have still increased strongly over the past five years:<\/p>\n

\"WA\"WA<\/p>\n

The reality is that if energy costs continue to rise, then Australia will become an industrial wasteland, with a less diverse and sophisticated economy, lower productivity, and, ultimately, lower living standards.<\/p>\n

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There is no Future Made in Australia without abundant, affordable, and reliable energy.<\/p>\n","protected":false},"excerpt":{"rendered":"Soaring energy costs have contributed to Australia\u2019s declining manufacturing sector, which is the smallest in the OECD as…\n","protected":false},"author":2,"featured_media":165230,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-490341","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/490341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=490341"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/490341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/165230"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=490341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=490341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=490341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}