Loy Yang Power, owner of Victoria’s largest brown coal station, has voiced its fears over the country’s new Carbon Tax, saying that the Federal Government’s plans to assist the power industry will not stop the price erosion of its assets.

 

Although the Federal Government will offer $4.5 billion to cover 24 per cent of the sector’s carbon liability, Loy Yang Power’s chief executive Ian Nethercote told the Australian Financial Review that he was not confident that carbon permits offered by the government will offset all costs to be passed on to customers.

 

“There will be an impact on assets and we will not be able to maintain the value of our business” he told the AFR.

 

The warning by Loy Yang comes after the company confirmed that it believes it will not be one of the coal-fired generators to be paid to close by the Federal Government.

 

"I have no doubt that Loy Yang will continue to operate for some time, and I can't see that we will be a contender for the closure package that's been presented by the government," Mr Nethercote said.

 

Concern over knock on effects across the manufacturing sector in Victoria have surfaced after Australian Aluminium Council executive director Miles Prosser warned that the tax could add up to $60 per tonne of aluminium.

 

"By our calculation, the announcement will add about $60 [per tonne] to the cost of producing aluminium in Australia and that's $60 that we can't wear compared to competing producers in China,” Mr Prosser said

 

“The way the policy is structured, that $60 will rise to $200 over the next few years so it's both a hit to competitiveness now, but also a rising hit to that over the next few years."