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Razorback economics improve on carbon tax drop

Razorback economics improve on carbon tax drop

Photo by Reuters

22nd July 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The abolishment of the carbon tax has given the business case of ASX-listed Royal Resources’ Razorback iron-ore project a boost of about A$100-million, the company said on Tuesday.

Earlier this month, the Senate voted 39 to 32 in favour of killing the carbon tax, which was introduced by previous Prime Minister Julia Gillard.

An independent review into the proposed 9.3-million-tonne-a-year premium iron project, in South Australia, had estimated the project’s net present value (NPV) at around A$2.7-billion, assuming foreign exchange rate parity.

The financial modelling of this NPV included a provision for a carbon tax at A$23/t of carbon.

Royal said on Tuesday that by excluding the carbon tax charges, the Razorback project's NPV has now been boosted by A$100-million.

“Royal will continue to do all possible to mitigate the project’s energy usage as it is a major cost element of the proposed operation. We have proposals to offset our carbon generation, such as afforestation, and it is intended to continue to develop these proposals in the absence of a carbon tax," Royal MD Marcus Flis said.

The Razorback project was expected to deliver about 9.3-million tonnes a year and would require a capital investment of A$1.2-billion.

Edited by Creamer Media Reporter

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