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Perilya blasts tax

Wednesday, 31st October, 2012

By Andrew Robertson

Mining company Perilya has blamed the Federal Government's carbon tax for a more than 50 per cent increase in generation costs at its Broken Hill mine.

The increase, which was revealed in Perilya's activity report for the three months to September 30, coincides with the introduction of the tax on July 1.

Managing director Paul Arndt said in the report that the increase would have an annual impact on the Broken Hill Operations of around $3 million.

He told the BDT yesterday the increase was not related solely to electricity use, saying there were also some fixed charges and various other levies.

But he said it was still "significantly higher" than the average retail electricity increase of 16.4 per cent.

"For Perilya the carbon tax isthe bulk of the increase in electricity charges," Mr Arndt said.

He said Perilya was surprised by the size of the increase, given the "general government guidance" on percentage increases expected.

The government maintains that the introduction of the carbon tax has had a moderate impact on electricity charges, with the bulk of the increases due to network upgrading.

But Mr Arndt said the carbon tax "reduces the competitiveness" of its Broken Hill mine and that "offsetting initiatives" by the government had not provided any real benefit to Perilya.

"Given the difficulty of generating cash in the current world environment with low commodity prices and the strong Australian dollar this type of charge reduces the competitiveness of the Broken Hill Operations in a world where our main competitors do not face these types of cost increases applied by governments."

Mr Arndt said the increase in generation charges was not behind a decision to lift the annual production target at Broken Hill to 125,000-130,000
tonnes of combined metal, up from 110,000-120,000.

"No. This is a result of the very good productivity we are getting from Broken Hill."

The mine posted its best production quarter since June 2009, producing some 35,100 tonnes of combined zinc and lead and more than 409,000 ounces of silver during the quarter.

Meanwhile, Perilya said underground development continued at the Silver Peak and Potosi mine declines, with some 1250 metres completed in the quarter.

It said cash in hand increased during the quarter to $50.5 million, up from $31.3 million, while its debt was US$156.6m.

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