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Australian manufacturing will rely on CBM development

World Coal,

According to the CEO of manufacturing company, Boral, coalbed methane (CBM) is critical to the future of Australian manufacturing, and rising energy costs are threatening to kill the industry.

Mike Kane, appointed to the position 18 months ago, has already overseen the cutting of 1000 jobs and reduction of AU$ 108 million from Boral’s cost base.

Such cost cutting measures can only go so far, however. In an interview with Channel Nine, Kane said that spiralling energy costs were seriously damaging manufacturers.

He explained that CBM would be a vital part of the future manufacturing sector in Australia, as its development and production will keep costs down.

Kane said that CBM “is part of the future recovery for Australian manufacturing. 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.”

He said that gas and electricity cost Boral AU$ 100 million/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% 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 [CBM] 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," Kane said.

Edited from various sources by Sam Dodson

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