Pacific Aluminium, which operates the Gove bauxite mine and alumina refinery in Nhulunbuy in the Northern Territory, has been facing twin financial challenges: the falling price of alumina and rising cost of oil.
Although the bauxite mining operation is profitable, the there are reportedly losses of a million dollars a day over the past twelve months, primarily because of the oil-powered alumina refinery.
The Rio Tinto subsidiary is seeking government assistance to switch to much cheaper gas. This requires a 600 km pipeline from Katherine to Gove.
Under Pacific Aluminium's plan, the company would ultimately pay for the pipeline via a transportation tariff although the NT and Federal governments would underwrite the $900 million pipeline.
A final decision is yet to be taken but the company's engineers have already drawn up plans to convert the refinery from heavy fuel oil to gas and build the pipeline in two sections over the 2014 dry season.
There are concerns that the refinery's requirement of 600 petajoules (PJ) of gas over the next 20 years will leave the Territory with little or no supplies for any other industry or for residential use.
The town's 4000 residents rely largely on the Gove mine operations for jobs although Nhulunbuy also has a small detention center for illegal immigrants.
If the decision goes against Pacific Aluminium, the town may need to generate employment by building a bigger detention center.