Xstrata smelter closure a carbon price warning: QRC

Xstrata’s decision to close its copper smelter is a warning of the fragility of the Australian resources sector global competitiveness, the Queensland Resources Council (QRC) warns.

Yesterday, the mining giant announced that it will be phasing out its copper smelting and refining operations in North Queensland.

“Xstrata Copper has made it clear that the competiveness of their smelting and refining operations have been ‘hit for six’ by the combination of cheaper, newer Chinese plants and rising costs here in Australia, and not in anticipation of a carbon price,” QRC chief Michael Roche said.

He stated that even “energy efficient operations such as these in Queensland can not compete against cheaper alternatives.”

Xstrata Copper NQ’s chief operating officer Steve de Kruijff told The Australian that “our unsustainability is due solely to a global perspective. Most of our competitors in other countries have their smelters and refineries close to a port, but we’re 1000km away.”

However, a recent report in The Australian claimed that closure was due in part to Xstrata facing difficulty in following environmental regulations at its Mount Isa smelting operations.

According to the report the miner had been seeking exemptions from the environmental regulations, as the smelter’s stacks were breaching the maximum emissions levels.

Steve de Kruijff said phasing out the copper smelting and refining operations in North Queensland and moving the focus to on the development of mining and copper concentrate was instead a response to changing global demand.

“Market conditions have been very challenging for copper smelting and refining operations due to over capacity in the global market, low treatment and refining charges and increasing operating costs,” he said

de Kruijff explained that copper smelting and refining operations have been under increasing pressure for a number of years and could not be sustained in the long term.

Queensland Resources Council chief executive Michael Roche stated that evidence pointing to a revived CPRS-style scheme could further damage the State’s resource sector.

Roche added that this closure could be “a foretaste of what will follow if the Federal Parliament agrees to impose an uncompetitive carbon price regime on our trade-exposed resource sector industries.”

However, de Kruijff told The Australian that the introduction of a carbon tax was not a factor in the miner’s Mount Isa and Townsville smelting and refinery closures.

Approximately 500 jobs will be lost in the closure according to The Australia, however, Xstrata has refuted these claims, telling the NorthWest Star "we’ve got five years ahead here and over that time we want to ensure no one will be left out.

"We don’t want anyone to go anywhere."

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.