Tax to hit CBH hard

Friday, 9th November, 2012

By Andrew Robertson

Perilya isn't the only Broken Hill miner to be hit hard by the carbon tax, with CBH Resources expecting a more than $7 million hit to its operating costs over the next three years.

Chief operating officer, Visko Sulicich, yesterday said the forecast increase in generation charges - for the Rasp mine and the company's Endeavor operation at Cobar - was the direct result of the carbon tax.

"Over our two operations in Broken Hill and Cobar it'll cost us over $7 million over the next three years," Mr Sulicich said.

"And there's no way to recoup that, mate, it just comes straight off the bottom line.

"So it's pretty frustrating from our point of view."

Perilya last week revealed that its generation charges would rise by about $3m a year as a result of the carbon tax.

The company's managing director, Paul Arndt, dismissed the excuse offered by federal Climate Change Minister, Greg Combet, whose office pointed the
finger at increases in NSW electricity network charges.

Mr Sulicich yesterday echoed comments by Mr Arndt that the tax, which came into effect on July 1, was ill-timed given depressed metal prices and the high Australian dollar.

"I would think it hurts them, and it hurts us and it hurts the industry in general," Mr Sulicich told the BDT.

He said the impact of the tax on CBH's generation charges could be even higher, given Rasp was not yet running at "steady state production".

"We haven't done the analysis yet on exactly what steady state production is going to mean for us.

"We've done the numbers on what's predicted and those numbers are where we're sitting at the moment.

"But we'll have a better idea in three months time once we get steady state production happening at Rasp."

According to Mr Sulicich, the company would find it difficult to introduce any measures at Rasp or Endeavor to reduce the amount of electricity they consumed.

"You've got to keep your ventilation fans on and your processing plant (going) non stop, so all the big ticket items are running most of the time."

While the tax would likely "take a bit of the cream off " the Rasp mine, the consequences at Endeavor, a similar-sized silver, lead and zinc mine, could be
more severe.

"Our operation at Endeavor at Cobar is marginal and it struggles to make money at these prices, yet they (the government) throw in another cost that we just have to absorb.

"If the (metal) prices fell (and) you get a marginal operation like Endeavor, you look at where you can cut your costs.

"It just makes it difficult when you've got to repay a lot of money and your whacked with something that comes out of left field."

Like Perilya, Mr Sulicich said CBH had complained to the federal government and its electricity supplier about the increase.

"We've done the same (and) we've run into brick walls everywhere."

The federal Opposition has promised to repeal the carbon tax if elected next year, so Mr Sulicich is hoping for a change of government.

"We're just hoping the next (election) they throw them out and they (the Opposition) do what they said they were going to do and throw out the carbon tax."