April 19, 2011 12:00AM
By Matt Chambers and Sid Maher, The Australian
BHP Billiton plans to defy uncertainty over a carbon price and the imposition of a mining tax to pursue a $48 billion expansion of its iron ore operations - one of the biggest resources projects in the nation's history.
The expansion of the mining monolith's Pilbara iron ore mines, ports and railways in Western Australia is flagged in federal and state approval applications and comes as the company today prepares to resume delicate talks with the government on Labor's plan to price carbon.
As frustration grows within Labor ranks that Tony Abbott is "getting away with murder" on the carbon tax debate, Climate Change Minister Greg Combet is preparing to confront industry concerns that a carbon price would disadvantage key Australian industries compared with their global competitors.
Leaders of major coal companies - including BHP, Rio Tinto, Xstrata, Anglo American Coal, Centennial Coal and Peabody Energy - will be in Canberra today for talks on "special circumstances" facing the industry.
Resources Minister Martin Ferguson is due to brief business leaders on negotiations with the steel, liquefied natural gas and coal industries on transitional assistance in the wake of their calls for exemptions.
The Australian has obtained documents circulated to the industry transitional working group that compare emissions regimes in Europe and New Zealand with Kevin Rudd's 2009 carbon pollution reduction scheme.
The committee, which includes representatives of Woodside Petroleum, BHP Billiton, Rio Tinto, Xstrata Coal, BlueScope Steel, OneSteel, Shell and Origin Energy, has been provided with details of a speech by Productivity Commission chairman Gary Banks, which outlined its approach to comparing international carbon prices.
The meetings come after the Climate Change Department yesterday reported Australia's emissions rose 0.5 per cent last year, driven in part by a 44 per cent increase in iron and steel production. The jump came despite a fall in carbon emissions from electricity generators, as cooler weather and higher use of gas and hydroelectricity lowered demand for coal-fired power.
But carbon emissions from industrial processes increased 13.4per cent on the back of the surge in iron and steel production.
As the carbon debate raged in Canberra, BHP Billiton flagged the expansion of its Pilbara region iron ore mines, ports and railways that could triple the company's production over the next decade if Chinese growth continued to support demand. The staged project, known as the Port Hedland outer harbour development, would rival the West Australian LNG operations Gorgon and the North West Shelf as the nation's biggest resources projects. It would also boost the nation's annual commodities revenue by $US22bn a year based on analysts' long-term estimates for iron ore prices.
A spokesman for Mr Abbott said last night it could only be assumed that BHP Billiton, in announcing such a large expansion, believed that the proposed carbon tax would be weakened from its current proposed form.
BHP yesterday began federal and West Australian approval processes to expand its Port Hedland shipping capacity by 240 million tonnes of iron ore a year through eight new shipping berths built in four stages at the end of a planned jetty stretching 4km into the Indian Ocean.
The miner has been forced to build the project because it was unable to get access to Rio Tinto's more-easily expanded Pilbara ports after both a full Rio takeover and an iron ore merger failed. BHP ships about 150 million tonnes of iron ore a year from Port Hedland and recently revealed $US8.4bn plans to grow that to 240 million tonnes soon after 2014.
The extra annual production flagged yesterday would bring capacity to 480 million tonnes a year.
As well as BHP's plans, Rio Tinto has ambitions to grow its Australian iron ore capacity from about 225 million tonnes to 433 million tonnes.
Andrew Forrest's Fortescue Metals Group plans to grow from about 50 million tonnes a year to 350 million tonnes, which is why analysts expect prices to drop.
BHP plans to give board approval for the first of four stages for the outer harbour project at the end of next year, with first production expected in 2016. Each stage would take between two and three years to build.
Yesterday, amid a growing backlash from unions and the business community over the carbon tax, senior federal ministers, including Infrastructure Minister Anthony Albanese, played down the latest opinion poll which put Labor's standing at its lowest in 15 years.
Mr Albanese said all governments pursuing economic reform faced poor results.
Julia Gillard promised to cushion the impact of electricity prices on pensioners, but warned that prices would continue to rise.
"But what I will do when we price carbon is I will make sure pensioners receive more assistance than the pricing impacts that they're going to experience," the Prime Minister said. "So they'll actually end up better off as a result of pricing carbon."
Tony Abbott, touring mining operations in Western Australia, moved to capitalise on the increasing pressure from unions and business on the government over the carbon tax.
After food and grocery producers joined mining companies to warn the levy could destroy jobs and cut living standards, the Opposition Leader said Australian workers were beginning to understand that their jobs would be less secure if the carbon tax went ahead.
"We are competing in an uncertain and difficult global environment so workers are entitled to feel a bit insecure about their jobs and that insecurity is going to be worse if this carbon tax goes ahead because Australian business will have a burden on their competitiveness that overseas businesses won't face," Mr Abbott said.
He said he did not think Ms Gillard could give a guarantee that no jobs would be lost through the carbon tax.
Greens leader Bob Brown, speaking ahead of today's multi-party climate change committee meeting with the government, urged Labor "to hold its nerve" in the face of bad polls and vocal opposition to the tax.
"This is going to be a real test of resolve of the Labor government," Senator Brown said.
Additional reporting: Ben Packham, sourced :The Australian
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