Climate change 'to impact big miners'

December 11, 2006

Mining giants Rio Tinto and BHP Billiton are among six Australian companies most at risk from the impact of climate change, a report says.

Among the Australian Stock Exchange (ASX) top-100 listed companies, those involved in emissions-intensive industries are most at risk, says Citigroup research.

In a surprise result, property trusts are among those most likely to benefit from climate change as they could earn emissions credits from a likely trading scheme by reducing energy use when constructing environmentally friendly buildings.

The companies most at risk are Rio Tinto, BHP and BlueScope Steel, Caltex, Iluka and OneSteel, according to the research titled Climate change and the ASX100 - An assessment of risks and opportunities.

Climate change effects companies' profitability due to the cost of potentially pricing carbon,and through weather and climate impacts, the report says.

"Those at risk include emissions-intensive companies, facilities particularly exposed to severe weather damage, agriculture and water-intensive industries exposed to drought, and in the long term insurers that may misprice catastrophe risk," the report said.

BlueScope Steel is the most emissions-intensive company by double that of the next companies, Iluka, OneSteel and AGL and Alumina, when levels of carbon dioxide production for each $10,000 market of capitalisation were compared, the report said.

Citigroup Investment Research managing director Bruce Rolph said some of Australia's biggest companies were beginning to recognise the importance of climate change.

"Some of the big resource companies are taking it seriously - both the issues to do with emissions but also the understanding what physical risks there may be to their portfolio of assets," Mr Rolph said.

He said Rio, BHP and Alumina were among companies most aware of climate change issues and all had strategies in place to reduce emissions.

The report noted that the big miners could be exposed to falling coal sales, as governments seek alternative energy sources to meet climate change commitments.

Prime Minister John Howard announced a task force on the weekend to inquire into Australia's possible involvement in an emissions trading scheme.

The task force of bureaucrats and resource industry figures, will also investigate how Australia might be involved in an emissions trading system that involved other major nations.

Mr Rolph said the research found that the "winners" in renewable energy and gas, as they had low or zero emissions.

"Winners were also in the property industry where a number of property trusts are building sustainable buildings and in some cases earning emissions credits (in the NSW Greenhouse Gas Abatement Scheme) through reducing energy use," he said.

Top of the list of "winners" were property investment company Investa Property Group, energy retailer Origin Energy Limited, and metals recycler Sims Group Ltd.

The airline, media and retail sectors were among the 40 per cent of ASX100 companies that failed to provide relevant climate change information and were therefore not included in the research.

AAP