EU carbon tax expansion hits New Zealand's biggest steel and aluminium exporters
The European Union's plan to expand its Carbon Border Adjustment Mechanism (CBAM) to manufactured goods containing iron, steel and aluminium will affect New Zealand's $1.2 billion exports to the EU. NZ Steel and Rio Tinto's Tiwai Point aluminium smelter are the most affected producers. The NZ government is engaged in consultations with the EU.
According to Brussels sources reported by RNZ Business, the European Commission is preparing to expand the scope of the CBAM (Carbon Border Adjustment Mechanism) to include manufactured goods such as bolts, screws, automotive parts and kitchenware. The regulation will directly affect New Zealand's $1.2 billion in annual exports to the EU.
New Zealand Steel CEO Robin Davies stated that the additional carbon obligations would impose $130 of cost per tonne and could weaken the company's competitive position in the EU market. Rio Tinto, which operates the Tiwai Point aluminium smelter, noted that on the positive side the additional obligations would provide a renewable-energy advantage in regional energy tenders.
New Zealand Trade Minister Todd McClay opened consultations in Brussels with EU trade officials and is lobbying intensively for recognition of the NZ Emissions Trading Scheme (ETS) in the carbon-calculation methodology. Australia, Norway and Canada are preparing a joint submission with similar concerns. The EU regulation enters into force at the start of 2027.
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