Alcoa locks in smelting deal

Alcoa has reportedly struck a deal to ensure its controversial aluminium smelters continue operating for decades.

The aluminium giant has signed contracts with generator Loy Yang Power for smelters at Portland and Point Henry, near Geelong, until 2036, The Age reports.

The existing power contracts expire in 2016 and 2014.

Despite decades of subsidising cheap power, a spokeswoman for Energy Minister Peter Batchelor said the government was not involved in the deal and subsidies would end in 2016.

She said the government would not pick up Alcoa's costs in the event an emissions trading scheme was introduced.

Taxpayers have been subsidising the smelters since the Cain government finalised a deal with Alcoa in the mid-1990s to build and operate the Portland plant.

Environment Victoria spokesman Mark Wakeham told the newspaper in a time of climate change it was insane to power aluminium smelters with brown coal.