Business

Jan 15, 2013

Resources firms dine out despite carbon tax scare campaign

Australian resources companies have enjoyed a healthy six months since the introduction of the Gillard government's feared carbon tax. So much for the predicted business wipeout.

Andrew Crook — Former <em>Crikey</em> Senior Journalist

Andrew Crook

Former Crikey Senior Journalist

Australia’s leading resources stocks have spiked since the Gillard government’s introduction of the carbon tax, despite doomsayers from the conservative side of politics predicting share market carnage in the wake of the impost.

10 comments

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10 thoughts on “Resources firms dine out despite carbon tax scare campaign

  1. Roger Clifton

    So Tony Abbott predicts that a carbon tax would wipe out industries that use lots of electricity?

    That does assume that electricity comes from carbon-based fuels. However, he does have a point, if Australia continues to prohibit nuclear power. You can’t smelt aluminium etc with unreliable wind power.

    The Coalition would win votes if they promised to repeal that legislation, and left it up to the heavy electricity-users to argue the case for non-carbon baseload electricity.

  2. Burt Chris

    Andrew’s article seems to have let his very obvious personal politics get in the way of any meaningful analysis. Holding up Bluescope Steel as some sort of stock market darling because it is up 91% to $3.50 or so ignores the fact that it used to $45.00 per share. The drop can’t all be traced back to the mining tax which I think is his point but percentage gains mean nothing in a comparison of the sort he is making. Similarly the BHP proce used to $50.00 – the recovery to $38.00 merely means some factors have moved in their favour (like the recovering US economy and China holding up better than feared). Andrew has not proved his point that the mining tax impacted share prices positively or negatively.

  3. Gavin Moodie

    The lack of a nuclear power industry in Australia is due less to government prohibition than to the lack of the massive government subsidies that would be needed to make it viable.

  4. Dave Sag

    Roger you call wind power “unreliable” yet there are several new technologies (including this one by Apple Inc – see http://appleinsider.com/articles/12/12/27/apples-wind-turbine-technology-uses-heat-not-kinetic-energy-to-generate-electricity ) that offer ways to generate steady streams of “base load” power from wind. Nuclear won’t ever be viable here because no-one is willing to risk the huge amounts of money needed to develop an Australian nuclear industry. As Gavin points out such an industry would require a massive investment by the Government and not even a coalition government is ready to hitch themselves to that white-elephant.

    Uranium is not a renewable resource; sunlight and wind are. The money it would cost to build a nuclear industry here would be better spent on developing technologies that better harness renewable energy and better transmit that energy to where it’s needed.

  5. John Bennetts

    Gavin has provided not a shred of evidence to support his highly misleading affirmation.

    Those interested in factual content can google LCOE – Levellised Cost Of Electricity and perhaps come away both surprised and better informed as to comparison costs of electricity from all conceivable sources, calculated using a methodology which captures all costs throughout the lifetime of each technology.

  6. Gavin Moodie

    True, I should have given the references, both to Crikey articles by Bernard Keane: ‘Marn’s minimalist white paper goes the market way’ published on 9 November 2012 and ‘Nuclear power costs are going up and up, Minister, not down’, 24 October 2012.

  7. Roger Clifton

    @ Dave Sag

    We don’t have to develop an entire nuclear industry here, or invest in a prototype reactor, we only have to let utilities buy one.

    All a Coalition (or any environmentally honest) government has to do is open the gate by rescinding the prohibition. Company engineers can then do their arithmetic (LCOE). That’s when a carbon price does its work, persuading energy users to switch to the best non-carbon power source.

    “Not renewable”? Nuclear is sustainable. Carbon fuels are not.

  8. dazza

    When I heard Abbott frothing at the mouth about Whyalla, La Trobe valley etc with one of his famous quotes that these industries ….“will be wiped off the map by Julia Gillard’s carbon tax”.
    I always think the opposite to Abbott and thanks to him, I didn’t sell any shares and I’m doin fine thank you very much.

  9. Steve777

    “In August, Abbott stumbled when grilled by 7:30 host Leigh Sales over BHP’s decision to dump its Olympic Dam project.”

    I would replace “stumbled” with “lied”, although it is entirely possible that Abbott was genuinely ignorant and didn’t know what he was talking about. Of course in either case he expected to get away with it as our lazy or biased media normally allow him to do. It must be great to be a right winger and not be bothered by the need for facts, evidence, logic or consistency.

  10. David Hand

    It is never smart to attach a causal relationship to stock price movements and anyone taking Andrew Crook’s analysis as a guide is very brave.

    Resources share prices are driven mostly by commodity prices and the second half of last year saw a recovery of sorts in coal and iron ore.

    I know the leftie luvvies have had a lot of fun with Tony Abbott’s prediction that Whyalla would be “wiped off the map” along with those peurile jokes on 1 July that it was still there. To any objective view, the issue is about the survival of the steel industry in that location and its survival depends on it being given every chance to compete in global markets. The carbon tax is a burden on this trade-exposed industry.

    Bluescope is continuing to shed jobs. The steel industry is doing it tough in Australia in 2013. Meanwhile, Chinese and Indian steel industries continue to pump enough untaxed carbon into the atmosphere to make any IPCC “window of opportunity” a joke.

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