BlueScope Steel Ltd., Australia’s largest steelmaker, may have to develop a stalled A$1 billion ($1 billion) co-generation plant in stages, citing capital constraints and government plans for a carbon tax.
The project, on hold since 2008, may be broken “into five or six smaller projects over a period of a decade or more,” Michael Reay, manager of corporate affairs of the Melbourne-based company, said in a phone interview. The company scrapped plans to construct the plant before a 2012 deadline and may build it stages, the Australian Financial Review reported today.
BlueScope, which reported a first-half loss, began a review of the project at Port Kembla in New South Wales state more than two years ago during the global financial crisis. The government plans to introduce a carbon price next year before moving to emissions trading as early as 2015.
“Our capital investments are currently restricted to ensuring operational security, there’s not a lot of other capital that we could invest,” said Reay. “The carbon tax is adding to the uncertainty.”
BlueScope shares fell 1.3 percent to A$1.915 at 1:54 p.m. local time in Sydney trading, taking losses so far this year to 15 percent.
A co-generation plant uses surplus gas from iron and steelmaking to produce electricity and steam. The company flagged in February 2009 that the plant may be built in stages.