Australian government's carbon trading scheme draws flak from Rio

18 April 2009

The Rudd government's scheme for carbon trading scheme has come in for criticism from mining giant Rio Tinto for its prohibitive price tag. Under the scheme the mining company may have to close some of its long-life coalmines around 2020 and cost the company A$2.9 billion over the next decade.

Chris Renwick, Coal & Allied chairman said at he company's annual general meeting that the fundamental cause for concern was the exclusion of coal as an emission intense trade exposed industry though it meets all criteria for admission. He added that it was a very major concern.

According to the company, the scheme would cost it A$130 million in 2010-11.

The CPRS could potentially undermine Australia's economic growth to the detriment of the nation, Rio Tinto's Australia managing director Stephen Creese said in Rio's submission to the Senate committee inquiry on draft CPRS legislation.

Rio said many of its other units not classified as emissions intense and trade expose (EITE) activities could see cost escalations of A$1.5 billion over the next decade under the scheme.

There could also be additional costs if permit allocations for alumina are not correctly implemented. It could see a further A$1 billion increase in costs over the next decade while another A$430 million could be taken up by EITE allocation erosion could cost.