Coal seam gas holds key to manufacturing future: Boral boss


Coal seam gas is critical to the future of Australian manufacturing, says Boral chief executive Mike Kane.

Mr Kane told Fairfax media that rising energy costs are threatening to kill the industry.

The American executive has only been running Australia's largest supplier of construction materials and building products for about 18 months, but he has already slashed 1000 jobs and cut $105 million from Boral's cost base.

Mr Kane still has costs firmly in focus, telling Financial Review Sunday on Channel Nine that spiralling energy costs are seriously damaging manufacturers.

"Coal seam gas is part of the future recovery for Australian manufacturing," he told the program.

"If it's not exploited properly, I think Australian manufacturing has a use-by date attached to it because the inflationary pressures in energy will kill domestic manufacturing through time."

Gas and electricity cost Boral about $100 million a year. The company manufactures concrete, bricks, plasterboard, and other building and construction materials. The building materials group's recently signed contracts in NSW and Victoria will mean Boral's cost of gas rises about 20 per cent from this year.

In December, fertiliser and explosives maker Incitec said its new gas contract for its Phosphate Hill plant in Queensland would add $50 million to manufacturing costs.

Exxon Australia executive Paul Foster said this week that gas was only going to get more expensive.

"More [gas] exploration is needed and I think there are too many inflationary pressures facing domestic manufacturers to withstand that pressure if that [exploration] doesn't happen," Mr Kane said.

Because of import parity pricing, it is difficult for Boral and its competitors to pass cost increases on to customers. But Mr Kane is testing the waters.

Related news & editorials

  1. 20.03.2018
    by      In
    The NSW Government has announced a one-off package of up to $47 million to help local government and industry to respond to China’s National Sword policy.
    The announcement came from Environment Minister Gabrielle Upton, who said: “NSW has a strong kerbside recycling system and the Government,... Read More
  2. 20.03.2018
    by      In
    AMTIL will be using its presence at NMW to set the scene for a busy events programme over the coming year.
    AMTIL has a long-standing relationship with NMW, having colocated its own Austech exhibition with NMW for many years, and continuing to do so every second year in Melbourne. AMTIL’s... Read More
  3. 20.03.2018
    by      In
    A local  cosmetics brand called Australian Creams has topped a list of the most trusted national name among mainland Chinese consumers, according to a new index from Monash University.
    The brand, owned by family-run G&M Cosmetics and based in Sydney’s Sutherland Shire, was ranked above big-name... Read More
  4. 20.03.2018
    by      In
    NSW's rail expansion has been met with issues up and down the supply chain, but one of the earliest was the revalation that new trains were built too wide to safely fit through existing tunnels in the Blue Mountains. 
    Now, alongside prepared plans to alter existing tunnels, platforms, and stations... Read More