Gas costs may drive Brickworks offshore

Brickworks is investigating options to make bricks offshore as rising gas prices and an uncertain supply threaten its Australian operations.

Soaring gas prices could force Brickworks to bring to an end more than a century of brick making in Australia.

The building products maker says its recent negotiations to secure gas supply until the end of 2019 have resulted in a 76 per cent price increase across its east coast operations.

Only one of the major gas retailers could provide a firm offer to supply gas in 2019, Brickworks said, and supply issues could worsen from there, and even dry up.

The company says state and federal governments have failed to develop an effective policy to address domestic energy supply, despite repeated warnings from industry.

"As the domestic gas supply situation worsens in Australia, it (moving offshore) is just one of a whole range of things that we need to look at," managing director Lindsay Partridge told AAP on Tuesday.

"Obviously, we don't want to go there, but what people have got to realise is that if you've got no energy, you've got no choice."

Mr Partridge said Brickworks already imports about one million bricks each month from Spain - about five per cent of its total supply - and will extend that.

"If we needed more still, we could set up other works or buy works in certain places like the Malay Peninsula," Mr Partridge said.

"It is a traditional brickmaking area, and there's a number of facilities there, and it's got the energy and reasonable labour."

Other possible manufacturing sites include New Zealand, East Timor and South Korea.

Mr Partridge said Brickworks will assess its overseas options over the next six to 12 months.

Chairman Robert Millner said the export of Australia's gas was jeopardising the jobs of thousands of brickmakers and bricklayers.

He said gas exporters had wrongly assumed that they could meet their overseas commitments with their own reserves, and should be banned from covering their shortfalls with gas from other parties that have traditionally served the domestic market.

Also, governments should improve the regulation of gas pipeline infrastructure and ensure appropriate incentives for new investment.

In the longer term, Australia needs to make exploration and development easier and get more suppliers into the market, Mr Millner said.

"A failure to act will continue to risk manufacturers moving offshore or increasing imports at the expense of local production and Australian jobs," he said.

"Frustratingly, some governments seem intent on exacerbating the issue, even if that means the lights will go out in houses and factories across the country."


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Source: AAP



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