By Jason Scott March 20 (Bloomberg) -- Australia needs to invest at least A$100 billion ($92 billion) in electricity infrastructure in the next decade to meet growing demand by consumers, the Minister for Resources and Energy, Martin Ferguson, said. “We need more investment in electricity supply infrastructure,” Ferguson told business leaders in Brisbane, according to a statement released today. “For too many years, uncertainty about carbon pricing, state government privatization plans, retail price regulation, network regulation, and more recently, the global financial crisis, have hampered investment.” The nation, the world’s largest shipper of iron ore, alumina, lead, zinc and coal, needs increased power generation to encourage new resource projects and avoid household blackouts during periods of high demand. Shortages of natural gas for domestic use would stall development of industries, including aluminum and fertilizer production, that need the fuel as part of the manufacturing process. “Higher energy prices would primarily affect energy- intensive processing operations,” said Matthew Ward, an investment manager at Perth-based Katana Asset Management Ltd. “Any increases in primary energy costs would adversely affect the potential for future downstream processing of mineral resources.” Alcoa Inc., the biggest user of gas in Western Australia, has stalled an alumina refinery expansion in the state, which generates 70 percent of the nation’s exports to China, until it can secure a long-term competitive gas supply. Decade of Shortfalls While Western Australia is at the center of a liquefied natural gas boom that may see annual exports of the fuel hit almost A$40 billion by mid-decade, domestic supplies will lag demand until at least 2020, according to the DomGas Alliance, a user’s group that includes Newmont Mining Corp. and Fortescue Metals Group Ltd. Australian electricity prices have risen about 35 percent in the past three years, according to Ferguson’s department. “The biggest cause of higher electricity prices in Australia is the high capital cost of increased investment in electricity networks -- investment that is critical to guarantee supply reliability,’ Ferguson said. “Whilst the Australian government is concerned about the impact of the price increases on families and businesses, in many cases they are now unavoidable if we are to guarantee supply reliability.” Alcoa is spending as much as A$140 million to find new gas supplies, according to its Web site. Alumina is used to make aluminum. LNG is gas chilled to liquid form for shipping. To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net

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