Carbon tax threatens aluminium jobs-Hunt

The federal opposition has tried to link possible job losses at Rio Tinto's Bell Bay aluminium smelter in Tasmania to the imminent introduction of Labor's carbon tax.

Bell Bay general manager Ray Mostogl has not blamed the carbon price but rather 'tough market conditions in the form of a high exchange rate, higher costs of production and low aluminium prices', according to Fairfax Media.

It has been reported that about 600 jobs are at risk at the Bell Bay smelter.

Opposition climate action spokesman Greg Hunt says Rio Tinto has warned that the operation could be shut entirely within two years.

'The prime minister (Julia Gillard) must immediately defer the carbon tax to save Australian jobs, with the announcement that Rio Tinto is considering shutting its Bell Bay aluminium smelter in Tasmania,' Mr Hunt said in a statement on Monday.

'Faced with a higher Australian dollar and low metals prices this is the worst possible time to add an additional cost to an already struggling sector.'

Mr Hunt pointed out that Treasury modelling shows the carbon price is expected to result in a 60 per cent in aluminium production by 2050.

He also referred to Alcoa's review of its Point Henry aluminium smelter in Geelong.

But when that review was announced in early February managing director Alan Cransberg was at pains to point out it had not been prompted by a future price on carbon even though that would be an 'additional cost'.

'The present situation is a result of low metal prices, a high Australian dollar and input costs,' Mr Cransberg said at the time.

Climate Change Minister Greg Combet has previously noted that the impact of the carbon price on the aluminium sector is equivalent to about a one per cent appreciation in the value of the Australian dollar.

Labor's carbon tax starts on July 1 with a fixed pollution price of $23 a tonne. It will then transform into an emissions trading scheme three years later in mid-2015.

Comment was being sought from Rio Tinto and Mr Combet.