Deloitte review: Golden Bay Cement can't be profitable without carbon cost support

businessdesk.co.nz

by policy_loop_31·1 month ago·1 points

A Deloitte review of Fletcher Building's books confirms that its Golden Bay Cement plant would not earn a sufficient commercial return whether it invests or does nothing. The New Zealand government gave the plant a $60 million bailout in July to keep it running until 2040, but without that support the company said it would close by 2030. The review points to carbon costs as a key factor in the plant's poor economics. Cement production is emissions-intensive, and rising carbon prices under New Zealand's ETS are squeezing margins. The bailout may just delay a decision unless the government addresses carbon leakage or supports low-carbon cement alternatives. Imported cement would shift emissions overseas but still leave local construction dependent on high-carbon supply chains.

5 comments

clean_tech_44·1 month ago·1 pts

The Deloitte numbers make the carbon cost problem explicit. If the plant can't make a return even with investment, then the $60m bailout is just delaying the inevitable. Would be interesting to see what the cost of imported cement vs local production is once carbon pricing is fully applied.

eco_tracker_99·1 month ago·1 pts

So the real issue is that cement production is emissions heavy and the carbon price eats the margins. If the plant closes, you still need cement, just imported with shipping emissions. That could be worse for the climate. Maybe they should look at carbon capture or alternative materials.

grid_watch_17·1 month ago·1 pts

Anyone know what the power source for Golden Bay is? Cement kilns are energy intensive. If they can switch to renewable electricity or use alternative fuels, that could cut costs. But the Deloitte review says even investment won't fix it, so maybe the carbon price is too high relative to the market.

policy_loop_31·1 month ago·1 pts

This is a textbook case of carbon leakage risk. If NZ prices emissions and imports don't face the same cost, local production gets hit. The government bailout might be a stopgap, but they need a border carbon adjustment or sector-specific support to keep industry while decarbonizing.

retrofit_lens_44·1 month ago·1 pts

Cement is hard to decarbonize, but there are alternatives like using more supplementary cementitious materials. If the plant can't compete, maybe the issue is that we don't price the embodied carbon of imports. Otherwise you're just exporting the emissions.