A major maritime union wants to Federal Government to stop aluminium producer Alcoa from using a foreign-crewed ship to move cargo from refineries in Western Australia to its smelter in Victoria.

The union says it may even take court action over the Department of Infrastructure and Regional Development’s decision to award Alcoa a licence to run the foreign crew last month.

The license is only temporary though, as Alcoa plans to sell its ship MV Portland and get a permanently foreign-manned vessel to run between Bunbury, Kwinana and Portland.

Australian Council of Trade Unions (ACTU) president Ged Kearney said that by granting the license, the Federal Government given the company the green light to sack 40 Australian seafarers and replace them with foreign labour.

The union’s outrage comes soon after a leaked Alcoa document showed the ship needed significant investment to stay on the water.

The internal document reportedly point to cost savings in the millions of dollars that would come from the move to a foreign-crewed vessel.

“Transporting alumina from Western Australia to Victoria using a foreign flag vessel will reduce Portland Aluminium's shipping costs by approximately $AU7 million per annum,” the document said.

The crew of MV Portland is managed by shipping management company ASP, not Alcoa.

An Alcoa spokesperson said it was a tough time for the global aluminium industry.

“In Australia, our focus is on reducing operating costs and improving productivity to help all our facilities remain internationally competitive,” he said.

“Decommissioning the MV Portland is one of a number of cost saving measures being taken by Alcoa in an attempt to help protect approximately 700 direct jobs and many more indirect jobs associated with the Portland smelter.”

Deputy Prime Minister Warren Truss said through a spokesperson on Friday that Alcoa was making a commercial decision to scrap the ship, but noted that no Australian-licensed ships had stepped in to pick up the work.

He said it had nothing to do with a recent Senate committee review of possible changes to the country's shipping laws.

The Senate investigation was dubbed “WorkChoices on water” by Labor.

The Opposition is warning that the potentially fundamental changes may increase competition, but would also see the disappearance of Australian-flagged ships.