Investors warn miners on climate stance

Summaries - Australian Financial
Wednesday 3/6/2009 Page: 1

Australia's largest institutional investors accused resources companies of giving different, more alarmist warnings on the impact of the government's emissions trading scheme to the public and politicians that they are giving to shareholders. An independent assessment from investors, including AMP Capital Investors, Colonial First State and BT Financial Group, is that the impact of the carbon pollution reduction scheme (CPRS) on most companies is expected to be minimal.

Investor Group on Climate Change (IGCC) chairman Frank Pegan said the CPRS will have a negligible monetary impact on Australian companies in its early years. Mr Pegan's comments are based on a Goldman Sachs JBWere report in May of the earnings impact of the CPRS on the S&P/ASX 100.

RiskMetrics Group has estimated that the government's $12.5 billion assistance package of free carbon permits is worth $2.759 billion to Rio Tinto, $1.711 billion to Alcoa, and $1.028 billion to BlueScope Steel over the first five years. The IGCC includes ARIA, Baker & Mckenzie, Citi Investment Research, Merrill Lynch, and Tyndall Investment Management, and the group's comments were backed by RiskMetrics analyst Drew Fryer.

However, there has been strong critical language from the Minerals Council of Australia, which released research from Brian Fischer on the impact of the CPRS on employment. Mr Fischer is a former head of the Bureau of Agricultural and Resource Economics. Chief executive of the MCA Mitch Hooke said the CPRS was 'fundamentally flawed', and the body's largest member Rio Tinto has agreed, while telling shareholders another story.

During the Merrill Lynch global metals and mining conference in Spain last month, Rio's chief executive Tom Albanese did not refer to the words emission or carbon in his presentation. Saying one thing to a Senate committee and giving shareholders another view was OneSteel chief executive Geoff Plummer. BlueScope Steel chairman Graham Kraehe used the same approach at an Australian Institute of Company Directors Brisbane event.