Cement producers want level playing field with carbon tax

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The leader of the B.C. Conservatives is warning that jobs in Delta and Richmond's cement industry are in grave danger because of the provincial carbon tax.

"Foreign-made cement, which does not pay the carbon tax, now sells at a sharp discount to our own B.C.-made product," said John Cummins in a press release.

"As a result, B.C. cement producers, who are forced to pay the carbon tax, have seen foreign competitors make significant inroads into our domestic, provincial market since the tax was enacted."

Jasper van de Wetering, environmental manager at Lehigh Cement in Delta, declined to comment on the charge, citing concerns of creating a political issue.

However, he said Lehigh and the cement industry is hoping the B.C. government will soon make changes to the carbon tax that will resolve the problem.

Bob Cooper, president of cement for LaFarge Western Canada, which includes plants in Richmond and Kamloops, agrees with Cummins' claims.

"Factually, yes, the importers have increased their market share in B.C. and part of this is most likely due to the carbon tax," he said. "We've been working with the government for a couple of years on this thing and trying to find solutions to it," he said.

Cooper said the carbon tax was implemented for the right reasons and is revenue neutral.

"However, I think there were some unintended consequences to us in the cement industry."

Only B.C. cement producers are taxed for carbon while U.S. and international importers are not, putting LaFarge and Lehigh at a competitive disadvantage.

"We're not asking to do away with the carbon tax because we don't believe that's the right thing to do," said Cooper. "We're asking them to level the playing field and make it across the board that anyone who's selling cement in B.C. is taxed equally based on their carbon footprint."

Cummins said imported cement has soared to a 34 per cent market share in B.C. in the first half of 2012 from 6.5 per cent in 2007, and as a result B.C.'s three cement kilns are operating at between 50 and 60 per cent capacity.

"Those plants directly employ 300 highly-skilled and well-paid workers, and additionally create hundreds of indirect jobs," said Cummins. "The carbon tax threatens all of those jobs."

Cooper confirmed that LaFarge's two B.C. cement plants dropped to 50 per cent capacity during recent years due to the recession, but have since increased to 75 per cent in the past six months by streamlining operations and improved economic conditions.

Despite recent increases in capacity, LaFarge has still seen a decline in its market share in B.C., however.

One thing that's helped mitigate job losses in B.C. for LaFarge was the closing of its Seattle plant in 2010, affecting roughly 70 jobs there. LaFarge now serves the Washington state market with exported cement from their Richmond plant.

Cooper added that it's difficult to determine to what extent imports or the sputtering economy are ultimately responsible for lower cement production.

The carbon tax hasn't been a complete loss for LaFarge either. The taxes collected in B.C. goes into the Pacific Carbon Trust, a Crown corporation that then gives the cash to private firms to cut their emissions, usually through trust-subsidized improvements to their operations.

Money collected so far has subsidized upgrades to Lafarge's Richmond cement plant so it could burn wood waste instead of more carbon-intensive coal, creating an offset to sell.

Cooper said that's a good thing.

"We're trying to work with the government to find solutions where we can take some of the taxes and put them back into environmental improvements in the plants."

adrian@southdeltaleader.com