Carbon tax ‘could end steelmaking in Australia’

As the Australian Labor government pushes forward its green agenda it has come under fire from industry, in particular the steel industry. Debate on the issue continues and the impact on the industry is not yet completely clear. However, BlueScope’s assessment is certainly bleak.

SBB 18 April Australia’s proposed tax on carbon dioxide emissions could cost BlueScope Steel $400m and end steel production in Australia, claims Paul O’Malley, ceo of the country’s largest steel producer. However, proponents of the tax say the added cost will be minimal.

Australia intends to impose a carbon tax from 1 July 2012 as a prelude to an emissions trading scheme three-to-five years later. Although no price has yet been announced, the government’s top climate advisor has suggested A$20-30 (US$21-32/t) per tonne of CO2, Steel Business Briefing understands.

The success of Australia’s mining industry has blinded the government to the country’s weak manufacturing sector, O’Malley says. “If you tax the local steel producer, you are basically saying we want to encourage imports of steel and hide the carbon overseas.” A tax on steel imports into Australia would be necessary to ensure domestic steelmakers can compete locally, he added.

However, the government suggests the industry is overestimating costs. Imposing a A$20/t tax on carbon dioxide emissions would add only A$2.60/t to the cost of steel, claims climate change minister Greg Combet.

The Australian Workers Union argued on Friday that the steel industry should be exempt from the tax and has threatened to withdraw support from (Labor) prime minister Julia Gillard if any steel jobs are lost. The Greens, which hold the balance of power in the Australian senate, have acknowledged that the carbon tax is likely to result in job losses.


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