Alumina Rejects Wagerup Carbon Tax Claim

Alumina Ltd says the high cost of construction in Western Australia rather than the carbon tax is a key reason that the expansion of its Wagerup alumina refinery has stalled.

WA's Environmental Protection Authority on Monday granted AWAC, Alumina and Alcoa's joint venture company, an extension until September 2016 to substantially commence the expansion that was first given environmental approval in 2006.

The Australian newspaper this week reported an Alcoa spokeswoman as saying the company would not revisit the expansion until it had a clearer picture of the full impact of the carbon tax, due to start on July 1.

The media report also cited the need to secure energy supplies, which Alumina chief executive John Bevan concurred with on Thursday.

But, Mr Bevan said, it was 'not the case' that the carbon tax was the key reason the project was not yet going ahead.

'The capital cost of building in WA is high, as seen with BHP's Worsley (refinery),' Mr Bevan told a conference call for analysts.

The cost of expanding BHP Billiton's Worsley alumina refinery in WA has blown out substantially due to factors including inflationary pressures and the stronger Australian dollar.

This had prompted analysts to speculate recently that the asset may be sold by the mining giant.

Alcoa last week announced that AWAC could close one of its two Australian aluminium smelters, Point Henry in Victoria, in the face of continuing difficult global economic conditions for the industry.

The company warned in January that it planned to close or curtail about 12 per cent of its global smelting capacity to improve its competitiveness amid falling aluminium prices and escalating raw materials costs.

The Point Henry announcement triggered a parliamentary furore, with federal Opposition Leader Tony Abbott blaming the possible closure on the government's carbon tax.

Prime Minister Julia Gillard labelled his comments a disgrace given that 600 jobs at the smelter hung in the balance.

'It (the potential Point Henry closure) is really not firm at this stage,' Mr Bevan said on Thursday, adding that Alcoa's global curtailments would occur in the next four or five months.

In delivering a near fourfold surge in full-year net profit on Thursday, Alumina said costs at Point Henry and its other aluminium smelter in Portland, Victoria, were last year pushed up by increased alumina and coke prices, and the rising Australian dollar.

Alumina booked a net profit for the 12 months to December 31 of $US127 million ($A119.16 million), up from $US35 million ($A32.84 million) for the 2010 calendar year.

Mr Bevan said margins rose after the company moved to price some of its alumina on an index/spot basis.

Morningstar analyst Mark Taylor said a 55 per cent rise in underlying earnings to $US128 million beat the investment research firm's forecast of $US113 million ($A106.02 million).

The company to maintain its full year dividend at six cents per share.

Mr Bevan said the company was cautious on the outlook for 2012, reflecting volatile pricing conditions, a strong Australian dollar and high input costs.

Conditions deteriorated towards the end of 2011, with prices for Alumina's products falling significantly.

Shares in Alumina closed up 1.5 cents, or 1.3 per cent, at $1.17.

Our ETS Future 'Will Not Come Cheaply

AUSTRALIA will be unable to produce affordable baseload power supplies while meeting its emissions targets under present policy, new research has found.

A study by Melbourne's Grattan Institute, to be published today, warns that while carbon pricing will help make low-emissions technologies competitive, it will not be enough without big structural and policy changes.

Tony Wood, the institute's energy program director, says governments face "an acute intellectual and policy challenge" steering a course between inadequate support for low-emissions technologies or unduly favouring one technology over another. He cautions "Australia's move to a low-carbon future will be too expensive unless they do."

The Grattan research stresses markets as the primary mechanism by which Australia can reduce its emissions, but it says markets cannot work properly unless governments optimise regulatory and policy frameworks.

The study also warns against letting ideology limit the scope for manoeuvre by preventing serious evaluation of carbon capture and storage and nuclear energy. "A range of technologies available today can generate electricity at or below 0.2 tonnes of carbon dioxide per megawatt-hour and have significant scale-up projection," the Grattan research finds.

"Yet none currently represents more than 2 per cent of Australia's electricity supply and

their future technical and economic potential is shrouded in uncertainty."

The report finds further refinement of the underlying technologies of low-emission energy options will be the most important tool for their future development and commercialisation.

It reminds governments of their roles overseeing the development of new transmission networks and pipelines, resource maps, market frameworks, regulations and engineering skills.

The Grattan researchers urge the commonwealth to ensure the carbon pricing scheme works properly by setting long-term emission caps and call on all governments to act to ensure there is a level playing field for all power-generating technologies.

The report's authors urge the removal of obstacles that impede technologies such as wind and geothermal from connecting at large-scale to electricity grids built around the needs of very large fossil-fuel plants.

Carbon Tax 'alarmism' Doesn't fit Facts, Scientists Warn

SCIENTISTS from around the world, including the former head of Australia's National Climate Centre, are calling for calm on global warming, saying alarmist rhetoric is not backed by evidence and is being used to increase taxes.

Writing in The Wall Street Journal, the 16 scientists say a "large and growing number" of scientists and engineers do not agree that drastic action on global warming is needed. "The number of scientific 'heretics' is growing with each passing year. The reason is a collection of stubborn scientific facts," they say. "Perhaps the most inconvenient fact is the lack of global warming for well over 10 years now."

Independent MPs back mining tax

The Federal Government has secured the support of key independents Tony Windsor, Rob Oakeshott and Andrew Wilkie for its mining tax.

The independents have secured a $200 million program to examine environmental concerns over coal seam gas mining and an increase in the tax threshold from $50 million to $75 million for small companies.

But the passage of the bill is by no means assured.

The Greens, who have threatened to block the legislation if the tax threshold is increased, are insisting the foregone revenue of $20 million a year be made up by other means.

However the support of the independents is a big boost to Julia Gillard's Government, which is trying to get the tax through the Lower House before Parliament rises for the year on Thursday.

It has been buoyed by Labor Party-commissioned research showing 56 per cent of people do not think average Australians are benefiting from the resources boom.

The Government has agreed to a demand by Mr Wilkie to lift the tax threshold at which the tax will apply to $75 million from $50 million and phase in another increase to $125 million.


Mr Wilkie had expressed concerns about how the tax will affect small miners, a concern shared by Western Australian independent Tony Crook.

The Tasmanian MP says 20 to 30 companies will pay the tax when it reaches the $125 million threshold.

"That will go some way to making for a fairer tax for the small mining companies," he said.

"At the end of the day they are the companies that are going to become the big companies."

Mr Wilkie said he was unable to negotiate any change to the depreciation provisions, but accepted the Government had negotiated in good faith.

But Mr Crook says he will not be supporting the tax and argues the Government should consider amendments to protect small miners.

"Some companies may choose to put their projects on the backburner or not proceed at all," he said.

"This will have a massive detrimental affect. There should be every inducement to keep these mining companies going and keeping people employed."

Sticking points
One of Mr Windsor's key sticking points was a commitment that any decisions about coal seam gas projects are based on rigorous scientific evidence.

The Government has agreed to his request.

Greens leader Bob Brown says his party will not budge from its demand that any amendments deliver a revenue-neutral position.

He said it was now up the Government to "get creative" to fund community services that would suffer from the $20 million decrease.

"Twenty million is 200 or 300 nurses or teachers sacked off the payroll. Andrew Wilkie might explain that to the nurses at the Royal Hobart or the teachers at Ogilvie High," Senator Brown told reporters.

"Giving a free $20 million back to the mining industry - and these are corporations turning in a profit of over $100 million a year - isn't something we are going to entertain.

"It's up to them to make this a revenue-neutral arrangement and it's part of a stand we're taking here for average Australians."

Internal friction
Earlier today, Opposition Leader Tony Abbott refused to respond to press reports that some in his party now favour the tax, despite the Coalition’s pledge to repeal the measure if it wins government.

The Sydney Morning Herald quoted an unnamed Liberal MP as saying there is a growing view within the Coalition that the tax will be needed to fund the party's promises.

West Australian Liberal Mal Washer has already publicly supported the tax - but says he will not cross the floor to vote with the Government.

Asked twice about the rumblings within his own party, Mr Abbott this morning would only say "this is a bad tax from a bad government".

After the second question, Mr Abbott told reporters to change the subject.

"I've made it very clear what our position on the mining tax is - if there are other issues we want to deal with today, that's great."

Carbon Tax Opposition Grows: Newspoll

There is growing opposition to the carbon tax after the House of Representatives passed bills for the scheme, a Newspoll has found.

Opposition to the tax has jumped six percentage points to 59 per cent, the poll commissioned by The Australian has found.

Support for the tax has fallen four points to 32 per cent.

But it's not all bad news for Labor, with the poll showing there was a four-point drop in the Coalition's primary vote to 45 per cent, the lowest since May this year.

The Greens climbed back to a record 15 per cent primary vote support, rising three points.

Prime Minister Julia Gillard's personal satisfaction with voters rose three percentage points to 31 per cent.

Opposition Leader Tony Abbott's rating was down from 36 per cent to 34 per cent.

However, Mr Abbott still maintained the lead as preferred prime minister at 39 per cent compared with Ms Gillard's 36 per cent.

Newspoll chief Martin O'Shannessy said Labor's primary vote was stuck on 29 per cent, unchanged from two weeks ago while the Coalition's loss of support had mostly gone to the Greens.

Ms Gillard might take heart from the improvement in her approval rating, he said.

But continuing opposition to the carbon tax made it hard to accept the government's view that the passage of its legislation through Parliament would improve Labor's position.

"We have been tracking this now for a while. Back in April-May it was 60, in July 59," Mr O'Shannessy told ABC Radio.

The latest Newspoll has opposition to the carbon tax still at 59 per cent.

Parliamentary secretary Kate Lundy believes commonsense will prevail on the carbon tax.

"This policy is embedded in good science," she told Sky News.

"I think the opposition is starting to be exposed in the lack of sincerity in their fear campaign."

People were starting to question the opposition's motivation, knowing it was about "dirty politics" not policy.

Opposition frontbencher George Brandis said the Coalition was "very, very happy" about the latest Newspoll.

"For the Labor Party to find comfort from the fact they're only 16 [percentage points] behind the Coalition on the primary vote ... just goes to show how desperate the Labor Party's situation has become," he said.

Senator Brandis rejected any suggestion the Coalition was playing politics over the carbon tax.

"We simply think it is a stupid idea and, by a majority to two to one, so do the Australian people."

Qld Taxpayers Warned about Carbon Tax

Queensland taxpayers will pay the price for state-owned power generators being devalued by the federal carbon tax, a Senate committee has been warned.

A committee scrutinising the proposed federal tax sat in Brisbane on Monday, where Queensland Resources Council chief Michael Roche argued Australia should not adopt a tax ahead of its international competitors.

The Bligh government has estimated the asset value of state-owned generators will decrease by around $1.7 billion.

Mr Roche said Queenslanders would likely have to prop up the generators after write-downs, although Premier Anna Bligh later told reporters that was a "furphy".

"In the case of government-owned generators, there's only one source of equity and it's the Queensland Treasury, it's the Queensland taxpayer," Mr Roche told the committee.

"Or other programs will be cut to fund the injection into the government-owned generators."

Mr Roche said the carbon tax was expected to comprise up to half of the operating costs of the state-owned generators.

But Labor senator Doug Cameron attacked the ACIL Tasman modelling Mr Roche quoted, saying it had proven unreliable.

The other potential impact on taxpayers was a predicted $1 billion loss in coal royalties to the Queensland government by 2020 due to the premature closure of mines, Mr Roche said.

"I would have thought that the Queensland government would see the risk for their single largest source of revenues outside of grants from the federal government," he said.

But Ms Bligh told reporters the industry had a "very strong future", with almost $60 billion worth of mining applications in the pipeline.

She said federal treasury modelling showed an expected 47 per cent growth by 2020 would only drop to a 45 per cent growth at worst.

"Let's be realistic here, the Queensland coal industry has taken some 40 years to get to where they are now and they expect to increase by almost 50 per cent in the next eight years," she said.

"I think the bigger question frankly is whether the industry itself, with or without changes in federal government regulations, is capable of that sort of expansion."

The committee heard Queensland Chamber of Commerce polling shows the tax will make 10 per cent of the state's small to medium-sized businesses unviable by raising power, transport and supply costs.

"Anybody with a power point, with an engine, with a gantry crane, a mig welder, will pay more for what they do," the chamber's David Goodwin said.

"Right across our economy we feel very, very exposed.

"We're not an economy which sits with a lot of head offices, sitting in buildings, working on computers.

"We are an economy which actually does stuff, and because of that we will be in the eye of the storm."

Senator Cameron ridiculed the chamber for relying on its own surveys rather than Queensland Treasury estimates, which predict strong growth after the recovery from summer's floods and cyclone.

"You're the Tony Abbott of the business community, you're the weathervane, are you?" he said.