Why the Government’s budget plan for bulk steel pipes is a ‘big risk’
Loading article The Government’s $4.5 billion $1.5 trillion plan for the bulk steel market will be a big risk for the industry, and could make it harder for Australia to export to the rest of the world, according to the head of a major Australian industry body.
Key points:The Government says the bulk copper and nickel-based steel market is undervalued by around 30 per cent due to the downturn in the global market for raw materialsThe Government is also introducing a new tariff on copper and iron sourced from Australia to encourage domestic production, which it says will generate jobs and help boost Australia’s export competitivenessThe Australian Manufacturing Workers’ Union says the Government has “no idea what it is doing” when it comes to bulk steel exportsAustralia’s bulk steel industry employs more than 25,000 people.
The Government has announced $1 billion for the commercial bulk steel (BCS) market, but it’s a significant amount of cash compared to the industry’s overall revenues.
In a presentation to the Australian Manufacturing Commission last week, the Australian Chamber of Commerce and Industry (ACCI) said bulk steel is “the backbone of the industry”.
“The bulk steel sector is responsible for more than $2.3 billion in economic activity and about 20,000 jobs in the BCS market,” the report said.”BCS is the most valuable commodity in the copper and steel markets in the world.”
The report said the BCSA’s $2 billion in new funding will allow the Government to boost its exports to Europe and Asia.
The $4 billion of new funding would be used to boost the commercial market in bulk steel from $10 billion in 2020 to $15 billion in 2030.
The bulk industry has been hit hard by the global downturn in copper and aluminium prices and the drop in demand for the raw materials.
However, the report says bulk steel producers are also concerned about a lack of international competition.
“We’ve seen that this has had an impact on our competitive position,” said Michael Wood, the CEO of the ACCI.
“It is difficult to see how any other sector could compete with the bulk industry in terms of raw materials, which is the backbone of our industry.”
Mr Wood said there were also concerns about the Government imposing tariffs on the copper that it will import from the United States.
“The US has been a leader in copper exports, and they are doing a lot of business with Australia and other markets around the world,” he said.”[We are] very concerned about any restrictions that could be put on copper that we may import from them.”
They would be imposing tariffs that could put the viability of that industry at risk.
“The Government’s plans include a tariff on the bulk imports of copper from the US of up to $10 a tonne.
This would be the first time the Government had imposed tariffs on copper from other countries.”
I don’t think you’re going to see that on the other markets that we import copper from,” Mr Wood said.
Australia is also expected to introduce a new $1 million tax on bulk steel to encourage Australian producers to produce more.
The move would raise around $2 million annually, and the Government is hoping it will attract $1,500 million more in export revenue over the next four years.
The ABC has contacted the Australian Government for comment.
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