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BlueScope secures carbon tax support
The Federal Government commits to helping Australia’s trade-exposed steel industry.
Following a campaign calling for a sectoral approach to the introduction of a carbon tax in Australia, BlueScope Steel has welcomed the Federal Government’s $300 million Steel Transformation Plan (STP). A four-year transitional support package for Australia’s trade-exposed steelmaking industry, the package has been acknowledged as a “pragmatic solution to a complex problem,” by BlueScope Steel Managing Director and CEO, Mr Paul O’Malley.
“The STP will provide funds to minimise the impact of a carbon tax on the Australian steel industry for the first four years. It provides an independent review mechanism to assess the impact of a carbon tax and other unrelated factors on the steel industry. And it signals the Government’s intention to limit the potential pass-through of Scope 3 coal emissions costs onto steel makers. “In summary, the STP materially reduces the overall cost of a carbon tax on BlueScope. It is a substantially better outcome than the CPRS scenario presented in our ASX release on 3 May, 2011,” Mr O’Malley says.
While the effect of the STP on carbon removes one significant hurdle, BlueScope Steel faces other macroeconomic challenges including the high Australian dollar, high raw material costs, low domestic demand and low prices.
“The STP legislation and regulations are yet to be finalised, but the Government has worked with the Australian steel industry to achieve an outcome that recognises it is trade-exposed and that international competitors are not currently subject to such a tax.
“The Government has listened to our arguments and our deep concerns about the carbon tax. In the STP it has produced a package that, if implemented as explained to us, deals with the steel sector’s carbon tax issues in a significant way for the first four years.
“We recognise the wider community pressures surrounding this issue and
have worked to achieve the best outcome available for the Company, our shareholders, customers and partners in the value chain,” Mr O’Malley says.
The Steel Transformation Plan provides:
- A $300 million package over four years to eligible Australian steel makers to provide support for innovation, investment and production. It will be split approximately 60% to BlueScope Steel and 40% to OneSteel, based on an agreed production/emissions formula
- Funding will be paid six monthly in arrears to support eligible expenditure on existing EITF activities including slab-making and hot-rolling, coldrolling, metallic coating and painting
- A review will be conducted if steel companies believe the impact of the carbon price mechanism has been greater than expected, or if other matters such as macroeconomic circumstances affect the competitiveness of the industry
The Government will request the Productivity Commission monitor the impact of carbon prices on major internationally competitive industry sectors, including steel. The Commission will make recommendations about ongoing carbon pricing arrangements for these sectors in Australia. The Government will also commit to an independent review process to monitor and assess evidence if suppliers of coal attempt to pass through cost increases resulting from the application of the carbon pricing scheme to their businesses (known as Scope 3 costs).
Mr O’Malley finished by saying the company will prepare an annual Clean Technology Report for the Government, specifying the measures it has taken to reduce emissions and improve its environmental footprint.