The move by the Australian government to introduce a carbon tax, to be followed by an emissions trading scheme, has been met by even more vociferous opposition from steelmakers than Europe’s ETS. As this article suggests, the actual costs remain unclear.
SBB 3 May BlueScope Steel has rejected claims from Australian federal treasurer Wayne Swan that Canberra’s proposed carbon tax would only add an extra A$2.60 (US$2.70) to the cost of a tonne of steel.
Swan said at the weekend that a carbon tax would have around 1/20th of the impact on the price of steel that Australia’s soaring dollar was having. He noted that the Australian dollar – which briefly passed the A$1.10 versus the US dollar barrier on Monday – had cut Australian steelmakers’ earnings by A$50/t in 2011.
Movements in the dollar “have a far greater impact on these industries than a potential carbon price,” Swan said.
But the country’s largest steel producer accused Swan of trivialising the impact a carbon tax would have on its business, with chief executive Paul O’Malley calling the “latest attack” on Australia’s steel industry “simply unacceptable.” He said the total estimated cumulative cost to BlueScope over the first eight years of the scheme – due to begin in 2012 – would be between A$500m and A$1bn.
“It is nothing like the incorrect A$2.60 per tonne of steel which is based on very selective use of data that counts only part of the cost, in only the first year,” said O’Malley on Monday. “According to the government’s own data, in the first year alone the cost could be up to $39m,” he said.
BlueScope has been reeling from soaring raw materials costs, the high A$, a flat domestic construction sector and import competition, Steel Business Briefing notes.