Firm revives chemical project
A CHEMICAL company that announced last year it was shelving a $1 billion expansion because of the carbon price - bolstering Coalition claims the scheme would kill investment - now says it is pushing ahead with the project.
Coogee Chemicals, which has a methanol plant in Prime Minister Julia Gillard's electorate of Lalor, says the carbon price is still a drag on its business but acknowledges changes to the scheme, such as scrapping the $15 ''floor'' price, make an expansion viable after all.
The revelation comes 100 days since the carbon price began on July 1, forcing about 300 large companies and councils to pay $23 for each tonne of carbon they emit. Opposition Leader Tony Abbott has vowed to scrap the scheme.
The manager at Coogee's Laverton methanol plant, Grant Lukey, told The Age: ''We are continuing to progress a project related to a world-scale methanol project. The project is ongoing, but the carbon tax hasn't made it any easier in getting it up.''
In November last year, with the Senate poised to pass the controversial carbon price legislation, Coogee Chemicals chairman Gordon Martin said a planned $1 billion expansion to create a world-scale methanol operation had become ''uncompetitive and unviable'' because of the Gillard government's scheme.
Mr Martin is also a member of the Coalition's business advisory council on climate change.
Dr Lukey said the company stood by its previous remarks. The scrapping of the floor price and greater certainty around industry compensation had lifted the prospects for going ahead with the expansion, which could create 150 jobs and $14 billion in exports.
''The project that was envisaged back then was killed off … but that doesn't mean you can't revisit the project under the new economic scenario … and that's what's happened,'' he said. ''The legislation has changed. That's a big part. There have been some fundamental shifts in the legislation.''
The carbon floor price would have set a minimum price of $15 a tonne from 2015, when the scheme shifts from an effective tax to an emissions trading scheme with a price set by the market. Removing it is likely to make the scheme cheaper for the 300 businesses and councils paying the carbon price, at least in the early years of the emissions trading scheme.
Dr Lukey said the previous investors had walked away from the methanol expansion and invested instead in Chinese projects, though he declined on commercial confidentiality grounds to say which ones. He said these coal-based plants in China were more greenhouse-intensive than the natural gas method used by Coogee.
The company was now looking at ''a similar project … but it will be different individuals involved''. There were several potential sites being considered for the expansion, he said, while stressing the carbon price still made the project more difficult than it would have otherwise been.
Methanol, a clear liquid, is used in the manufacture of particle board, paint, plastic bottles, rubber and a range of other basic products.
Coalition climate spokesman Greg Hunt said last November the shelving of the project meant there were ''150 jobs … that would have been created that will never be created''.
He said the government now faced a budget black hole if the price of carbon fell too far in 2015, but he did not comment directly on Coogee's improved prospects.
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