Twelve months on, my thoughts haven?t changed. Unless you?ve been living (quite literally) under a rock, the carbon tax is here. It took effect from 1 July, 2012, although it will be some time before we start to see its flow-on effects through the economy.
While the carbon price does not directly apply to small and medium size quarry businesses (the nation?s 500 biggest carbon emitters will each pay $23 per tonne for generating 25,000 or more tonnes of CO2), the quarrying and mining sectors have incurred a 6.21 per cent rise per litre in the diesel fuel tax. What will that mean for your operations?
Well, some operations may have to pass on the rising fuel costs to customers in their aggregate sales. Larger construction materials companies in the top 500 emitters may also have to raise the price of their products. Boral informed its customers in May that it will charge an extra $0.12 per tonne plus GST for ex-bin quarry products and an extra $0.95 per cubic metre plus GST for delivered concrete.
But is raising your prices the only solution? Do you want to lose valuable customers gained over many years by passing on the full fuel hike? Are there other ways of minimising the additional expense?
My message in this editorial, as it was 12 months ago, is much the same ? innovation and efficiency are key. What can you improve in your operation that may reduce your overheads and enable you to possibly absorb (at least in part) some of the expenses that derive from the carbon tax? Is there a fleet optimisation plan that you can follow to get the most productive hours out of your load and haul fleet?
Do your drivers rev their engines too hard when taking loads from the face to the crusher or execute too many point turns in loading trucks when fewer passes will do? Is mobile plant in part a solution to reducing fuel costs and power in an energy-intensive fixed plant? Are there partnerships that you can consider with recycling or landfill operations? There is no quick, easy fix to these questions but I raise them as food for thought.
Considering the regulation of the quarrying industry was tight across all jurisdictions before the carbon tax, quarrying businesses must think outside the box. It is clear from our feature starting on page 20 that the recycling industry, through partnerships with all tiers of government, academia and private enterprise, has benefitted from its willingness to innovate.
It?s also clear from this feature that far from being a direct competitor, the recycling industry can be a valuable ally for the quarry sector that experiences pressures in justifying the extraction of A-grade, non-renewable rock deposits. Blending recycled aggregates with lower quality quarry by-products can produce quality products for sub-base materials on construction ventures while saving primary quarry deposits for priority infrastructure.
To ?beat? the carbon tax and regulation in general, the quarry industry may have to enter into partnerships with the recycling industry and with other primary industries in the years ahead to show that it is serious about sustainability.
Quarry businesses should also take advantage (if they are eligible) of government-sponsored innovation programs, whether that be Enterprise Connect, AusIndustry or the Federal Government?s various clean technology programs.
Despite our misgivings about it, the carbon tax is the most extensive macroeconomic reform since the GST ? and the traditional quarry business model may have to adapt to the structural changes that it is designed to encourage. If you want to avoid paying the full amount of tax (either directly or indirectly) under the carbon pricing scheme, then you will need to review the way you run your business.
That will mean eliminating inefficiencies in your operations, considering more innovative, efficient and sustainable strategies, and contemplating new partnerships and alliances with likeminded members of industry and government.