Carbon tax money may fund BlueScope cuts

By Ben Langford
Updated November 6 2012 - 12:39am, first published August 14 2011 - 11:13am

Much of the $180 million in taxpayers' money promised to BlueScope Steel in the carbon tax package could end up funding the company's job cuts, which are expected to start within weeks.If BlueScope closes production at one of its two blast furnaces, as is predicted, it would slash its carbon emissions but would still receive compensation for them under the Federal Government's plan.In a move it calls the Steel Transformation Plan (STP), the Government has promised Australia's two largest steelmakers, BlueScope and OneSteel, $300 million over four years, to cover their carbon tax bill.BlueScope is to receive $180 million of the STP funding, but if the company halves steel production its carbon emissions - and its carbon tax bill - will take a huge drop.But BlueScope would still receive the full carbon tax pay-off under the STP, as it only has to continue making 500,000 tonnes of steel a year to qualify for the scheme.This would leave tens of millions of dollars which BlueScope would pocket at a time when it is facing the prospect of funding several hundred redundancy packages.BlueScope is expected to announce a full-year loss of around $1 billion when it reveals its annual results next Monday. The amount includes an underlying loss of about $100 million and $900 million in write-downs.On Friday night, chief executive Paul O'Malley told the Mercury that BlueScope is trying to get out of the export steel business altogether in a bid to stop haemorrhaging money from export contracts made unprofitable by the high Australian dollar.The restructure is set to involve halving steel production at Port Kembla, likely by closing one of the two blast furnaces, and cutting several hundred jobs.Mr O'Malley has said no final decision has been made on how the steelworks would be restructured. But he stressed the company's woes were not caused by the carbon tax, which would start next July.BlueScope is already facing a bill for its "early bird" retirement scheme, which has offered workers aged over 55 about $8126 plus one week's pay for every year served.

Subscribe now for unlimited access.

$0/

(min cost $0)

or signup to continue reading

See subscription options

Get the latest Wollongong news in your inbox

Sign up for our newsletter to stay up to date.

We care about the protection of your data. Read our Privacy Policy.