By Elisabeth Behrmann
Anglo American would struggle to proceed with $4-billion (R27bn) of coal expansions in Australia because of a plan to introduce a price on carbon emissions, it said yesterday.
The plan would cut the value of four Anglo projects in Australia, said Seamus French of the firm’s coking coal business. “The drop in value, about 45 percent… puts those projects in jeopardy – we’ll struggle.”
Australia’s government wants to introduce a carbon price from July 2012 in preparation for a trading system that may operate as early as 2015. Xstrata joined Anglo yesterday in saying the plan risked turning away mine investments.
Diversified mining groups “can deploy capital selectively in the most attractive jurisdiction”, said Mick Davis, the chief executive of Xstrata. “The strength of sovereign risk is an important consideration” when choosing where to invest.
Xstrata runs 17 thermal and steel-making coal operations in Australia that last year produced a total of 52 million tons of coal. Anglo owns six operating mines in Australia, producing 32 million tons of coal annually. Coking coal provided 8.8 percent of profit last year.
The carbon tax would cut coal mining investment by 13 percent and output by up to 35 percent, French said.
Australia’s Treasurer, Wayne Swan said: “Companies are investing like they’ve never invested before in the Australian mining industry.” Firms were calculating a future cost of carbon into their investments “like anywhere in the world” when committing to projects operating “30, 40 or 50 years”, he said.
The plan would cut the value of four Anglo projects in Australia, said Seamus French of the firm’s coking coal business. “The drop in value, about 45 percent… puts those projects in jeopardy – we’ll struggle.”
Australia’s government wants to introduce a carbon price from July 2012 in preparation for a trading system that may operate as early as 2015. Xstrata joined Anglo yesterday in saying the plan risked turning away mine investments.
Diversified mining groups “can deploy capital selectively in the most attractive jurisdiction”, said Mick Davis, the chief executive of Xstrata. “The strength of sovereign risk is an important consideration” when choosing where to invest.
Xstrata runs 17 thermal and steel-making coal operations in Australia that last year produced a total of 52 million tons of coal. Anglo owns six operating mines in Australia, producing 32 million tons of coal annually. Coking coal provided 8.8 percent of profit last year.
The carbon tax would cut coal mining investment by 13 percent and output by up to 35 percent, French said.
Australia’s Treasurer, Wayne Swan said: “Companies are investing like they’ve never invested before in the Australian mining industry.” Firms were calculating a future cost of carbon into their investments “like anywhere in the world” when committing to projects operating “30, 40 or 50 years”, he said.
Anglo shed 1.8 percent yesterday to R335.25. - (sourced Bloomberg)
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