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STUDY SHOWS CARBON TAX WOULD BOOST METALS COST UP TO 14 PERCENT

 STUDY SHOWS CARBON TAX WOULD BOOST METALS COST UP TO 14 PERCENT
 WASHINGTON, May 18 /PRNewswire/ -- The American Mining Congress issued the following:
 Efforts to reduce carbon dioxide (CO2) emissions through the imposition of a carbon tax could force the cost of metals in the United States to increase as much as 14 percent, according to a study released today by the American Mining Congress (AMC).
 The study, prepared by Everest Consulting Associates, showed the adverse impacts of a carbon tax are greatest for aluminum, copper, zinc and lead.
 "Potentially higher costs for metals producers, combined with adverse legislative and regulatory initiatives in several other areas, present a real challenge to the continued competitiveness and even survival of some U.S. producers," AMC President John A. Knebel said.
 Projected costs required to reduce CO2 emissions would be harmful to all sectors of the U.S. mining industry. "Coal companies would face closures and job losses, and as this study indicates, the metals side of our industry would face similarly debilitating effects," Knebel said.
 The metals mining industry is a major consumer of electricity, much of which is derived from carbon-based energy sources, such as coal. The Congressional Budget Office recently estimated that a carbon tax on all U.S. fuels equal to $100 per ton in the year 2000 would lead to a 30 percent increase in the average price of domestic energy.
 Under this scenario, the AMC study showed, the production cost of aluminum would rise by 14 percent; copper, 7 percent; zinc, 6 percent; and lead, 4 percent.
 Consider the potential impact of a $100 per ton carbon tax on copper, of which the United States is the world's second largest producer. The estimated energy cost of producing a pound of copper in 1990 was 23.8 cents. A 30 percent increase in this cost is equivalent to about 7 cents per pound.
 For a typical 200,000 ton per year integrated copper mine, mill, smelter and refinery, a 7 cent per pound increase equals increased expenditures of $28 million annually. Based on estimated 1991 primary copper smelter production of 1.65 million tons, the total cost increase would be about $230 million, the AMC study showed.
 "In an industry where competitiveness is measured in pennies per pound, any significant production cost increases could cause U.S. metals producers to lose their ability to compete with foreign producers in the global marketplace," Knebel said. "This, in turn, would force U.S. metals producers offshore and to cut jobs here at home."
 Energy production cost increases would negatively affect several states, including: Washington, Oregon and Montana, where 40 percent of all U.S. aluminum is produced; Arizona, New Mexico and Utah, where much of the nation's copper is mined; Alaska, Missouri, New York and Tennessee, where most U.S. zinc is mined; and Missouri, Alaska, Colorado, Idaho and Montana, where virtually all U.S. lead is mined.
 A study by CONSAD Research Corp. recently showed that as many as 360,000 jobs would be lost during the first three to five years that a carbon tax, or an equivalent policy to reduce carbon, is in place. By the year 2000, the study showed, job losses could top 600,000 and in the longer run -- beyond the year 2000 -- job losses could rise above 1.6 million.
 The American Mining Congress is the principal trade association for the mining industry in the United States.
 -0- 5/18/92
 /CONTACT: Quin Shea of the American Mining Congress, 202-861-2855/ CO: American Mining Congress ST: District of Columbia IN: MNG SU:


DC -- DC011 -- 1243 05/18/92 10:48 EDT
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Date:May 18, 1992
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