Some primary industry producers are already adopting renewable energy. But will that be enough to curb emissions, or forestall tariffs? Photo / Jia Yu
Some primary industry producers are already adopting renewable energy. But will that be enough to curb emissions, or forestall tariffs? Photo / Jia Yu
OPINION:
For some years, we’ve been warned that high emitting countries will face higher tariffs on their exports.
Now it looks as if it’s going to happen, in a move that could have a dramatic effect on demand for Australia’s mining exports.
Earlier this month, the US put a proposalto the European Union to create an international consortium to pursue trade in metals produced with lower carbon intensity and to use tariffs to penalise high carbon intensity metal production.
Separately, but also this month, the EU became the first big economy to legislate a “green tariff” on imports, to be levied on goods produced with high carbon dioxide emissions.
The irony is Australia’s mining sector is decarbonising. It is looking to replace diesel trucks with electric or hydrogen powered vehicles in the coming years and more mines are being run with self-produced solar energy.
The sector recognises that if it is to supply the raw materials needed to advance the world’s decarbonisation efforts – copper, lithium, cobalt, nickel and rare earths – it will need to do ensure they are produced with minimal carbon emissions.
People won’t buy a Tesla if they discover a huge amount of carbon has been emitted in its production.
The problem for Australia is what happens to our hard commodities – those we dig out of the earth – after we’ve shipped them to China.
China is a long way behind Europe and the US in decarbonising its industries and so the aluminium and steel produced with Australia’s hard commodities will be hit with the new tariffs, having an obvious impact on demand and prices.
This in turn will flow through to Chinese demand for Australian iron ore, coal, alumina and bauxite.
It’s impossible to quantify the looming threat, but anything affecting the relative prices of bulk commodities will have major impact on demand.
This is another example of the way the Australian economy is made vulnerable by its overreliance on China.
The next sector in the firing line is likely to be agriculture, another major export industry for Australia.
Star under scrutiny
Company directors and executives in Australia have been put on notice that they will be held responsible for wrongdoing by their companies, even if they’re not involved.
Australia’s corporate regulator, the Australian Securities and Investments Commission, last week launched legal action against past and current directors and executives of casino giant The Star Entertainment.
ASIC alleges board members “failed to give sufficient focus to the risk of money laundering and criminal associations, which are inherent in the operation of a large casino with an international customer base”.
Investigations into alleged money laundering at Australian casinos could have big consequences for company directors and executives. Photo / NZME
Board members approved the expansion of Star’s relationship to individuals “with reported criminal links”, putting the company at risk of money laundering, ASIC alleges.
It is also alleged board members did not take steps to prevent the potential for money laundering even when notified of those “critical risks”.
ASIC said this constituted a breach of director duty obligations.
The case came after damning inquiries found Star was unfit to run its Sydney, Brisbane and Gold Coast casinos, although state governments stopped short of closing them down, in part because of the huge number of sudden job losses that would cause.
The regulator is seeking court declarations of contraventions, the imposition of penalties of up to A$1.05 million per breach and disqualification orders in relation to individuals who were “at the peak” of the organisation.
ASIC argues part of a company director’s job is to address foreseeable, observable risks.
The directors of Star Entertainment were running a casino and should have been cognizant of the risks of money laundering and doing something about it, ASIC alleges. This goes to the core of the company’s business.
The case captures some of the biggest names of Australia’s director community, many of whom have received New Year’s honours for their services to Australian business.
Named in the lawsuit are current chair Ben Heap and current director Katie Lahey, who plan to fight the charges and remain on the board until next year.
Others include former chairman and former head of the Australian Rugby Union John O’Neill, former Macquarie Bank chief executive Richard Sheppard, former Boral CEO Zlatko Todorcevski and Link Group director and chair of Super Retail Group Sally Pitkin.
The case will be closely watched and sends a clear message to directors that they can’t turn a blind eye to the risks their company faces.
