The newly introduced carbon policy by the Albanese government in Australia has drawn mixed reactions from industry leaders, including Glencore's CEO, Gary Nagle. While acknowledging the policy's progressive nature by global standards, Nagle expressed concerns that it might inadvertently harm Australia's competitiveness on the international stage.
Australia's commodity exports accounted for over 70% of Glencore's impressive half-year profit of $7 billion. However, Nagle highlighted that the updated "safeguards mechanism" carbon policy, which came into effect on July 1, might place local businesses at a disadvantage globally. Nagle dismissed the notion that Australia is a carbon laggard, noting that the country's ambitious legislation could potentially hinder local industries' competitiveness.
The "racing ahead" approach, where a single jurisdiction rapidly advances its environmental policies, might not always yield positive outcomes. Nagle pointed out that such actions could push production and carbon emissions to regions with higher carbon intensity, thereby not necessarily reducing the global carbon footprint.
Glencore, a significant producer of Australian thermal coal and battery minerals like cobalt, nickel, and copper, is directly impacted by the carbon policy. Some of its assets, including coal mines, are covered by the safeguard mechanism, which sets emission limits that decline over time, driving site owners to reduce emissions or offset them.
Although Australia was previously criticized for its climate policies, the Morrison government adopted a net-zero target for 2050 after international pressure. However, despite acknowledging the Albanese government's more ambitious carbon policy, the Massachusetts Institute of Technology Review Insights ranked Australia 42nd on its preparedness for a low-carbon world.
Glencore is also closely involved in the battery minerals sector, producing cobalt, nickel, and copper. While cheaper lithium-ferro-phosphate (LFP) cathode chemistries have gained market share in electric vehicles, Nagle remains confident in the long-term demand for cobalt and nickel due to their essential role in EV batteries.
In conclusion, Glencore's CEO raises concerns over the potential impact of Australia's new carbon policy on local businesses' competitiveness and the global carbon footprint. While the policy reflects ambition, it also requires careful consideration of its consequences to ensure a balanced approach towards environmental sustainability and economic growth.