Nyrstar says carbon trading could shut smelters

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CANBERRA, Australia (AP) — The world’s largest zinc producer, Nyrstar, said Thursday its Australian smelters could become unviable under a proposed national greenhouse gas emissions trading scheme.

From 2010 polluters will trade permits to emit carbon-based gases that are blamed for global warming, under the government’s plan to reduce the country’s greenhouse emissions.

The government will initially set a price for the permits, sometimes called a carbon tax, and limit their number. Market forces will decide their future price as they are traded between polluters.

But Nyrstar’s warning that its smelters in Tasmania and South Australia states would become unprofitable increased pressure on the government to stall its plan until global agreement is reached on a carbon tax price.

Nyrstar chief operating officer Greg McMillan said company-commissioned modeling showed that the scheme would cost his business 70 million Australian dollars ($45 million) a year.

While the government has yet to announce the price it will set for creating a ton of carbon, the modeling assumed a cost of AU$40 ($26) a metric ton ($28 a U.S. ton) which was roughly equivalent to the European Union market price.

McMillan said that price would make Nyrstar’s Australian zinc and lead smelters internationally uncompetitive, and more than 3,000 jobs could be lost to developing countries such as China.

“There’s a big question mark over the viability of these operations because we operate on a global market where prices are determined on the London Metals Exchange and we have no ability to pass the carbon tax on to our consumers,” McMillan told The Associated Press.

“The world’s demand for zinc and lead is not going to decline if our smelters shut down; that supply will be taken up by other operations in parts of the world that don’t have the same price for carbon as an impost on production,” he said.

“Most likely, that will happen in China or India where they have less stringent environmental regulations and you will actually produce more tons of CO2 per ton of zinc,” he said.

London-based company which is incorporated in Belgium is the world’s largest zinc producer and third largest lead producer, according to the company’s Web site.

McMillan said while Nyrstar also had operations in the United States, China and Europe, 40 percent of its production came from Australia.

Climate Change Minister Penny Wong told the Senate Wednesday the government would continue to consult with Nyrstar and other businesses before releasing next month its final blue print for Australia’s emissions trading scheme.

Nyrstar said in a statement Thursday that it would not qualify for special government assistance to become more energy efficient because its carbon emissions were currently below a proposed threshold for emissions-intensive industries.