Bloomberg reports that Alcoa's alumina refinery expansion remains stalled because of an inability to obtain cheap long term gas supplies (as a result of LNG exports forcing local prices towards global levels) - Alcoa Gets Energy Chill From Australia’s $130 Billion Gas Boom (via the FT). The Varanus Island incident a couple of years probably hasn't helped matters either. Alcoa has managed to obtain long term supply contracts for its refinery in Victoria - but using brown coal fired power - the dirtiest power source of all...
Australia is attracting more than $130 billion of investment in some of the world’s richest natural gas fields to supply buyers in Japan and China. Domestic customers, including Alcoa Inc., will have to wait.

Alcoa’s stalled alumina refinery expansion in Western Australia “will not be back on the agenda until we can secure long-term competitive gas supply,” Michaela Southby, a Perth- based spokeswoman for the biggest U.S. aluminum producer, said in an e-mailed response to questions. The project may cost $4 billion, according to a 2008 estimate by ABN Amro Holding NV.

Royal Dutch Shell Plc plans to deploy a production vessel larger than an aircraft carrier off the coast of Western Australia to feed the liquefied natural gas boom that may see annual exports hit almost A$40 billion ($37 billion) by mid- decade. The state’s gas shortage will last to at least 2020, hindering mine projects, according to the DomGas Alliance.

“You have all this energy and gas but most of it’s exported,” said Peter Arden, a Melbourne-based mining analyst at Ord Minnett Ltd., a JPMorgan Chase & Co. affiliate. “It’s going to be a really big cost input for the whole of Western Australia, especially the miners who rely on it for power.” ...

New York-based Alcoa suspended a plan to double capacity at the Wagerup refinery more than a year ago because of the financial crisis and gas supply constraints. Gas prices in the state, the source of half Australia’s commodity exports, rose almost fourfold in the past decade and may keep rising until supply becomes available, said consultant ACIL Tasman Pty.

“The prices that are being asked will certainly preclude the development of a lot of future projects,” Tony Petersen, chairman of DomGas, a user’s group that includes Newmont Mining Corp. and Fortescue Metals Group Ltd., said in an interview.

More than 1,000 mine sites operate in Western Australia, which generates 70 percent of the nation’s exports to China, the biggest buyer of raw materials. The nation is the largest shipper of iron ore, alumina, lead, zinc and coal. It ranked sixth among LNG exporters in 2008.