CONSTRUCTION giant BGC is in the early stages of developing an offshore cement production capacity as it looks to offset the risks of manufacturing in Australia amid rising costs, notably the potential for a carbon tax.
CONSTRUCTION giant BGC is in the early stages of developing an offshore cement production capacity as it looks to offset the risks of manufacturing in Australia amid rising costs, notably the potential for a carbon tax.
BGC founder Len Buckeridge said he already had agreement from the relevant authorities to develop a $650 million plant in Indonesia from which he could manufacture both cement and its key input, clinker.
Mr Buckeridge said the cost of cement and clinker was expected to rise sharply under the proposed carbon tax because big amounts of energy were needed to generate the high temperatures required in their production.
“If there is a carbon tax there will be no clinker produced in Australia,” he said.
“They (producers) will just go somewhere else.”
Mr Buckeridge anticipates selling as much as 1 million tonnes per annum of clinker and cement products to the eastern seaboard, representing around 12 per cent of the national market.
BGC also proposes to make its own clinker, supplementing its existing imports of about 1mtpa from sources in South-East Asia, which provide feedstock for its cement works in Perth.
BGC is the nation’s biggest residential homebuilderand manufactures many of the inputs required for housing and commercial building construction, which it also supplies to the wholesale market.
Mr Buckeridge said the local manufacture of cement and another of his products, bricks, would become problematic under a carbon tax, along with other energy intensive industries such as aluminium and steel.
Many industries have raised concerns about the impact of a carbon tax pushing energy intensive operations offshore to other countries that did not impose such costs. The current carbon tax structure is limited to emissions in Australia and would not be imposed on imported products.
Steel manufacturer Bluescope Steel, which exports significant amounts of its production, is one company that has warned of the consequences of a carbon tax if local production is not exempted.
That call led the federal government’s climate adviser, Ross Garnaut, to suggest that some sectors of the Australian economy were demanding protectionist exemptions from the tax.
A move offshore would not be a first for BGC, although its recent decision to dip a toe in foreign waters was unrelated to the proposed carbon tax.
It is currently developing a $3.5 million spray plaster plant in Thailand, which Mr Buckeridge said was due to planning difficulties in the Town of Kwinana where BGC originally planned to site the project, near existing company operations.
Mr Buckeridge said the plant was to produce a type of spray-on plaster that is common in other markets, such as Germany, but not available in WA.
The BGC founder said the conditions imposed by the council for the development on a site on Beard Street in Naval Base were too onerous. He said he would, instead, make the plaster in Thailand and ship it down to Perth.
Mr Buckeridge said he was surprised by the difficulties in dealing with the council, which had significant unemployment within its boundaries.
Town of Kwinana Mayor Carol Adams expressed surprise at BGC’s move.
“The town has bent over backwards trying to accommodate the planning requirement of BGC within the statutory framework that we are required to work within,” Ms Adams told WA Business News.
She said a move by BGC to take the project offshore would appear to be entirely a financial decision and the council should not be a scapegoat.
“Both the Town of Kwinana and BGC had come to a mutual agreement and there was a clear understanding by both parties that these conditions would be met,” Ms Adams said.