Australian Carbon Tax 'Manageable' Says Gold Firm

by Mary Swire, Tax-News.com, Hong Kong

04 August 2011

Gold mining company Barrick Gold anticipates that Australia’s proposed carbon tax will increase the cost of production by USD12 an ounce.

Speaking at the Diggers and Dealers conference in Kalgoorlie-Boulder, Australia, the Barrick Australia Pacific regional president Gary Halverson said that the tax was “not insignificant but manageable”.

Barrick is the world’s largest gold producer, with a portfolio of 26 operating mines, advanced exploration and development projects located across five continents. The company also has the largest reserves in the industry, with about 140m ounces of proven and probable gold reserves, 6.5bn pounds of copper reserves and 1.07bn ounces of silver contained within gold reserves as of December 31, 2010.

The Australian government has set the carbon price at AUD23 (USD24.5) per tonne of pollution beginning July 1, 2012. This is to rise by 2.5% a year in real terms during a three-year fixed price period until July 1, 2015. The carbon price mechanism will then transition to an emissions trading scheme where the price will be determined by the market.

Around 500 businesses will be required to pay for their pollution under the carbon pricing mechanism, with more than half of this revenue used to assist households with tax cuts, increased family payments and higher pensions, benefits and allowances. Carbon price revenue will also be used to support jobs and to invest in clean energy and climate change programs.

However, while Gary Halverson described the tax as “manageable”, South African-based AngloGold Ashanti Australasian executive vice-president Graham Ehm stated that the tax would become increasingly burdensome in the coming years.

"It does escalate over three years," he said. "When it moves into an emissions trading scheme, we're going to be looking at USD40/oz to USD60/oz. My concern is that we don't know the flow-on effect for all our suppliers."

"Gold is a global business and capital moves," Ehm added, "and our competitors are in countries where there is no carbon tax."

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