Comalco says carbon tax may force it out of NZ

Aluminium smelter and major export earner Comalco says the government's Kyoto protocol carbon tax will drive up electricity prices which may force it out of New Zealand.

Comalco, which operates the Tiwai Point aluminium smelter near Bluff, uses about 15 per cent of New Zealand's electricity production and earns about $1 billion a year in export receipts.

At an electricity conference today in Auckland, Comalco's general manager of energy Mark Grenning said a carbon tax could raise the cost of electricity to an unacceptable level when its contract with state owned generator Meridian runs out in 2012, Radio New Zealand reported.

Comalco begins negotiations for a new contract with Meridian this year. The carbon tax is expected to come into force in 2007.

Apart from higher power prices, Comalco will also suffer under the carbon tax because the Tiwai Point smelter produces considerable greenhouse gas emissions.

Mr Grenning said Comalco wants a Negotiated Greenhouse Agreement (NGA) with the government which would give it exemption from carbon taxes in return for adopting environmental best international practice.

Comalco, the 79.36 per cent owner of New Zealand Aluminium Smelters, is now wholly owned by British resource giant Rio Tinto.

- NZPA