The objective of putting a price on carbon in Australia is to encourage a reduction in global greenhouse gas emissions as part of addressing the challenge of climate change.
Magnetite produces lower global carbon emissions in steel-making and, therefore, would enjoy a competitive advantage under an established global carbon trading scheme. (See Magnetite and the Environment)
Conversely, as there is not a mandated global emissions trading scheme, a new carbon pricing scheme (carbon tax) in Australia would penalise the value-adding magnetite industry despite its net global emissions benefits. Australian magnetite is highly trade-exposed and, therefore, deserving of industry assistance under the Federal Government’s Clean Energy Future Jobs and Competitiveness program.
Furthermore, because many Australian magnetite producers are yet to commence production, they are yet to receive formal classification as an Emissions Intensive, Trade Exposed Industry (EITEI). This assistance, negotiated by existing industries under earlier carbon pollution reduction scheme legislation, goes to benchmarked sectors bearing the greatest cost of reducing carbon emissions.
Unfortunately, as required by the rigid policy settings applied by the Federal Government, the Department of Climate Change and Energy Efficiency (DCCEE) is relying on data from only two Australian magnetite projects in Tasmania and South Australia in order to benchmark an entire emerging industry. In December 2011, Minister Combet advised MagNet that a level of assistance under the moderately emissions-intensive category (66%) would apply and would be entered into the regulations of the legislation.
The new wave of magnetite projects, mainly in WA, will produce considerably more magnetite than current projects and have vastly different technical specifications, including a lower grade of ore and much greater ore hardness.
Without adequate levels of assistance, consistent with that offered to other EITE industries, the unintended consequence of this model could be to prevent investment in an emerging industry that offers substantial national and regional economic benefits plus lower net global carbon emissions.
This goes against the Federal Government’s own key messages on the Carbon Pricing Scheme and commitment to support jobs and competitiveness as Australia moves to a clean energy future:
A Jobs and Competitiveness Program will provide $9.2 billion over the period to 2014-15 to assist the most emissions intensive activities in the economy that are exposed to international competition. This will support local jobs, encourage industry to invest in cleaner technologies and avoid ‘carbon leakage’ offshore.
MagNet has been working constructively with the Federal Government and its Multi-Party Committee on Climate Change to find a solution to this challenge and proposes that:
- the entire magnetite sector be classified as an EITE industry until the establishment of a global carbon pricing mechanism that recognises the environmental benefits offered by magnetite
- the Carbon Pricing Scheme include an additional “ultrafine” magnetite concentrate activity definition that recognises the different specifications of emerging magnetite projects, namely:
- the lower iron content of magnetite ore in emerging projects compared to existing magnetite projects
- due to its geological characteristics, the requirement to use a more emissions-intensive grinding process at emerging projects to produce a finer magnetite product
In addition, we seek:
- clear guidelines that enable significant matters to be re-visited by the sector
- the formation of an “Emerging Industries” advisory panel with the aim of providing greater clarity
and certainty on the mechanisms for review of assistance (e.g. via the Productivity Commission)
- an expert on magnetite be appointed to any review panel
For more details, please refer to the attached documents prepared by MagNet for stakeholders and decision-makers.
Apr 2011 Evidence to Senate Select Committee on Scrutiny of New Taxes
Jul 2011 Submission on First Exposure Draft of Carbon Tax legislation
Aug 2011 Submission on Second Exposure Draft of Carbon Tax legislation
Sep 2011 Submission to Joint Select Committee on Carbon Tax legislation
Sep 2011 Evidence to Joint Select Committee on Carbon Tax legislation
Oct 2011 Submission to DCCEE on Clean Energy Future Regulations