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Mining and metals companies' emissions up 28% in one year

DIRECT greenhouse gas emissions from the biggest mining and metals companies have ballooned by 28 per cent in one year, making that sector the biggest source of Australia's industrial emissions growth, a study shows.

Superannuation fund VicSuper has issued analysis it commissioned from consultants Trucost into the emissions of the largest companies listed on the Australian Securities Exchange, or the S&P/ASX 200 Index component companies.

VicSuper said the latest scientific evidence showed that climate change was taking place more rapidly than previously predicted.

It said drought and water scarcity in Australia was likely to get worse, the costs of heatwaves and bushfires were likely to escalate and coastal infrastructure faced rising risk from flood and storm damage.

VicSuper said super fund assets invested in the Australian equities market were exposed to the costs of climate change and it said its third 'Carbon Count' report underlined the contribution of businesses to a wider trend of rising emissions.

VicSuper says developed countries, such as Australia, should ensure that annual greenhouse gas emissions by 2020 are 25-40 per cent below their 1990 levels, in order to limit the damage from climate change.

The VicSuper report said Australia's biggest direct and indirect greenhouse gas emitters in fiscal year 2008 were BHP Billiton, Rio Tinto, BlueScope Steel, Qantas, AGL Energy, Wesfarmers, Alumina, OneSteel, Orica and Boral.

Annual total emissions of the S&P/ASX 200 companies amounted to 268.7 million tonnes of carbon dioxide-equivalent gases, a rise of 10.4 per cent in a year, mostly due to companies' fuel combustion and industrial processes.

It said the mining and metals sector contributed most to the increase in direct emissions as they rose by 28 per cent in a year and were up 34 per cent from 2006.

The report said Rio Tinto's annual emissions almost doubled on the year, to 30.3 million tonnes from 15.6 million, making it the single largest emitter of direct greenhouse gases. BHP Billiton's emissions rose by about 15 per cent.

Under a weak market price of $10 for every per-tonne emission, the total emissions of Australia's biggest 200 companies would cost $2.687 billion, or less than 1 per cent of combined pre-items earnings.

Under a $10/tonne carbon price, the cost of emissions from Australia's biggest 200 companies would be a quarter the 2008 earnings of one miner alone. Rio Tinto had $10.3 billion in underlying earnings in 2008.

Trucost found earnings of the 19 mining and metals companies would fall by 5 per cent on average under a $10/tonne carbon price, but some could face a 27 per cent earnings hit.

Mining and metals companies have the greatest range in direct profit exposure to carbon costs, it found.