Australia aluminium fears cuts if Labor wins poll
Date: 26-Oct-01
Country: AUSTRALIA
Author: Michael Byrnes
Major commodity groups told Reuters yesterday there was little trade-related difference between policies announced so far by Prime Minister John Howard's pro-business coalition and Kim Beazley's centre-left Labor Party.
Energy-guzzling aluminium is the main exception.
The Howard government has lined itself up with the United States by deciding not to ratify the Kyoto protocol, which would require Australia to cut emissions to eight percent above 1990 levels by 2010.
But one of Labor's first policies announced in the campaign for the federal election was ratification of the United Nations-led 1997 Kyoto Protocol, which would require developed countries to reduce their greenhouse gas emissions.
"We're disappointed about that and also disappointed that there was no recognition (by Labor) that there was some concern about the international competitiveness of trade exposed industries like aluminium," David Coutts, executive director of the Australian Aluminium Council, told Reuters yesterday.
"We have written to Kim Beazley expressing our concerns."
EXPANSION SAID THREATENED
The government commodities analysis unit the Australian Bureau of Agricultural and Resource Economics (ABARE) recently projected that adoption of the Kyoto Protocol would by 2010 cut Australian production of aluminium by 20 percent, alumina by around 14 percent, bauxite by around 12 percent, coal by around two percent and iron and steel by almost five percent.
Bauxite is the mineral mined to make intermediate product alumina, which is further refined into aluminium. Coal and iron ore are major Australian exports, worth A$12.5 billion and A$5 billion a year respectively.
A report under preparation showed Australian gas emissions would be around 20 percent above 1990 levels by 2010, even after offsets such as emissions trading and carbon sinks, Coutts said.
"If the right policy settings are in place there is very big potential for major expansion (aluminium) in Australia, like 35 percent and even more over the next 10 years," Coutts said. "Obviously that won't happen (with) the wrong policy settings."
Denis Porter, a mining industry consultant and former executive director of the New South Wales Minerals Council, which mainly represents the coal industry, expressed similar misgivings over Labor's policy on the Kyoto Protocol.
"It has major implications for energy pricing and so on," Porter said, pointing out that Australian production of aluminium and coal were related to electricity costs in different ways.
But the jury is still out in Australia's A$30 billion a year farm export sector, with its key swinging votes, on whether policy differences might affect output and exports.
The Liberal/National coalition government and the Labor opposition have both promised to retain a rebate for on-road fuel taxes for farmers for a year after June 30 next. The rebate, introduced last year, provides a major boost for farm exports.
After a series of major concessions to the rural electorate by the Howard government over the past 18 months, farmers are waiting to see if Beazley's policies will also push the bush.
Australia's top farm lobby the National Farmers Federation said it was waiting for the full list of policies from both sides. Both major parties were committed to trade, it said.
Biggest farm body, the New South Wales Farmers Association, said it was too early to assess comparative rural policies.
AWB Ltd, which operates a controversial monopoly on Australian wheat exports, said there were no differences between the two parties to affect the company or its export system.