THE tax that Opposition Leader Tony Abbott said would turn Whyalla into a ''ghost town'' will improve profits at the steel-making town's major employer, according to new analysis of the Gillard government's carbon tax package.

Claims by corporate research firm MSCI that Australia's two biggest steel makers will be better off under the carbon plan comes as OneSteel completes a $65 million upgrade of its Whyalla blast furnace to extend its working life ''beyond 2020''.

The OneSteel steelworks in Whyalla: not under threat from the carbon tax. Credit:Brendan Esposito

In a research note released yesterday, MSCI said OneSteel and rival BlueScope could enjoy earnings improvements of 2.1 per cent and 2.4 per cent respectively in the first year of the carbon tax.

The forecast - which is at odds with claims the tax could kill off the local steel industry - is based on the companies' eligibility for free carbon permits as ''trade-exposed'' businesses, plus a special $300 million support fund that will be given exclusively to the steel sector.