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Thursday, 29 November 2012
Page: 14074

Ms LEY (Farrer) (12:12): I rise today to speak about the Perilya zinc and silver mine in Broken Hill in my electorate of Farrer and the very serious effect of the carbon tax on its operations. I just want to talk about Perilya and make these comments. Before the global financial crisis the zinc world price was $1.28 a pound. It is now 84c a pound, which shows us that under the old cost structure the company would now be bankrupt if they had kept going the way they were. However, they resized, they laid off 400 people and they got costs down to where they are this year—50c to 60c a pound. Their margins are razor thin. They are very lean and highly skilled. They are an operation of which we as a nation should be very, very proud.

The carbon tax is now costing Perilya $3.5 million a year. With the Renewable Energy Target it is obliged to participate in, that is $5.5 million. In its most recent quarterly accounts, Perilya reported that its electricity costs were expected to increase more than $3 million per annum because of the carbon tax, a situation that just could not be maintained indefinitely.

Asked to respond earlier this month by the local paper, the Barrier Daily Truth, the office of the Minister for Climate Change and Energy Efficiency said that 'the carbon price impact is a very small component of Perilya's revenue and does not significantly impact on their competitiveness'. I repeat: this minister's office are so clearly on top of their brief that they apparently know better than the legal reporting that Perilya is required to give its own shareholders. Despite their diligent research, the minister's staff did not note that a $3 million carbon tax slug on Perilya actually equates to three times its annual operating profit. This company directly employs 409 people in a city of just 18,000 people. It is now forced to rely on its sister mine in the Dominican Republic to survive—that is right, Deputy Speaker. I talked about Perilya's proactive action in surviving the global financial crisis, and the government then introduced a carbon tax and a mining tax. I know the current mining tax does not apply to Perilya, but in that environment of uncertainty, with the crazy approach this government was taking to the miners who have built wealth in this nation, Perilya made a strategic decision to invest not in Australia but offshore in the Dominican Republic. The Dominican Republic, a developing country, has a mine operated by a company in Broken Hill that is subsidising those operations. I bring this example to the House to show how ridiculous this government and this minister are on the subject of the crippling effects of the carbon tax on manufacturing and mining.

Perilya's managing director, Paul Arndt, responded to comments from the minister's office in the Barrier Daily Truth and said that to say that 'the network charges of the NSW government owned Essential Energy have been the main driver of electricity price increases in Broken Hill' and are 'completely unrelated to the carbon price' may be a little misinformed. In gross terms, the carbon tax will increase Perilya's power costs at its Broken Hill mining and milling operations by in excess of $3½ million per annum.

The minister this week said that the carbon price is unquestionably having a positive effect on the economy. Well, Minister, it is not. Almost all of Perilya's production is sold overseas, and its competitors are not impacted by a carbon tax. Perilya's international competitiveness is adversely impacted by the carbon tax. It is an export exposed business, and that just shows its vulnerability in the current environment being operated by this government.

Perilya do not receive any assistance or offset of any form from government. Because of this obvious gap in knowledge, the managing director has personally invited Mr Combet or any of his staff to visit their operations to provide them with a detailed brief of the impact of the carbon tax in Broken Hill. Perilya are not grandstanders. They are, as I said, a company of which we should be proud. I would at least expect the minister to respond to their correspondence dated 14 November and give them the response and the understanding, take them seriously and acknowledge their role in today's economy. This is the carbon tax that was never going to occur under the Prime Minister— (Time expired)