Carbon tax threat to major aluminium plant

THE future of Europe’s largest aluminium plant, which is based on the Shannon Estuary, will be threatened by the carbon energy tax, the company claimed yesterday.

Aughinish Alumina's public affairs manager, Pat Lynch, said the fate of the company, which employs 700 people, will be under serious threat if the Government fails to recognise the group's unique position when it is implementing EU directives on gas emissions and carbon energy taxes.

The warning comes in the wake of government plans to introduce carbon taxes towards the end of 2004, which will dramatically increase all fuel and transport costs.

Minister for Finance Charlie McCreevy has published a consultation paper pointing out that Ireland has to reduce carbon dioxide levels by 15 million tonnes by 2012.

If it fails to do so, it could face up to €5 billion in fines under the Kyoto Protocol international agreement.

The minister is beginning a consultation process on the introduction of the carbon tax before setting out his proposals in the next budget.

Mr Lynch said the huge Aughinish Alumina plant at Askeaton, Co Limerick, contributes about €90 million to the economy annually. "Our main concern is that Aughinish Alumina is the most energy-intensive industry in the country, with energy accounting for 25% of our total production costs, and any further energy tax on top of that would be of very serious concern to the company," he warned.

Aughinish Alumina Ltd (AAL) made a detailed submission to the Oireachtas Joint Committee on the Environment and Local Government, in which it pointed out that an inflexible implementation of the various EU directives within the National Climate Change Strategy would pose a major threat to the viability of the company.

The company also warned that inflexibility would also threaten a proposed investment in the plant by Aughinish owners Glencore, of between €100m and €200m over the next five years.

Managing director of AAL, Damien Clancy, made a plea to the Oireachtas Joint Committee on the Environment and Local Government in July, asking that urgent consideration be given to the unique nature of Aughinish Alumina in the context of the National Climate Change Strategy.

He pointed out that Aughinish produces alumina, an internationally traded commodity, but that 87% of its competitors are located in countries not materially constrained by Kyoto greenhouse targets. "As such we are price takers in an industry where 87% of world capacity is not constrained by Kyoto," Mr Clancy said.

The Minister for the Environment and Local Government, Martin Cullen, has pledged that as in other industries the Government will take into consideration the serious concerns expressed by AAL.

"Achieving the Kyoto targets is a challenging task, and is environmentally necessary and economically feasible," he said.

"We have a window between now and 2008 for Ireland to get its house in order, and the Government is and will continue to work with industry to find a solution," the minister said.

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