Carbon tax to choke coal growth in NSW

THE Australian coal industry will haemorrhage $18 billion over nine years as the proposed carbon tax strangles growth in the traditional coal heartlands of the Illawarra and Hunter Valley of New South Wales and forces development in greenfield sites in western Queensland.
Carbon tax to choke coal growth in NSW Carbon tax to choke coal growth in NSW Carbon tax to choke coal growth in NSW Carbon tax to choke coal growth in NSW Carbon tax to choke coal growth in NSW

Narrabri North mine, image courtesy of Whitehaven.

Lou Caruana

The $1.3 billion assistance package offered by the government covers less than 10% of the carbon tax bill for the coal industry – far below the 94.5% offered to other trade-exposed sectors of the economy.

Up to 4700 job losses, lack of investment in regional and industry infrastructure, and negative impact to local small business businesses that supply goods and services to the mines would also result, according to Australian Coal Association executive director Ralph Hillman.

“Coal earns for Australia $50 billion each year and the economic effects of the Gillard government’s carbon tax package will be felt across the economy costing the coal industry alone $18 billion,” he said.

“In plain language, 140,000 Australians are employed either directly or indirectly in the black coal industry and we will see ordinary people from Blackwater to Moranbah in Queensland right through to the Hunter and the Illawarra in New South Wales lose their jobs because of this tax.

“We know from our own commissioned independent modelling that 4700 coal miners will lose their jobs and mines closures will mean many more jobs in supporting industries in regional communities will be lost.”

The $23 per tonne carbon price will add $1.80/t to the cost of producing coal. Given the rising costs of skilled labour, infrastructure and inputs such as fuel, this would make many slated project expansions marginal, especially in mines with highly unionised workforces such as those in the Illawarra and Hunter.

Underground coal mines, where fugitive methane emissions can more easily be calculated, would be harder hit.

New projects, such as those being proposed by Clive Palmer’s Waratah group in the Galilee Basin of Queensland, will benefit from being larger and having lower unitised costs over their longer mine-life profiles.

The decision not to build any more coal-fired power stations will also have adverse impacts for the NSW industry generally, with billions of dollars sunk or committed in infrastructure which will now have to be diverted.

Rio Tinto managing director Australia David Peever said: “The announcement is an unfair tax on Australian exporters. We are deeply concerned the proposed carbon tax fails to shield Australia’s export sector and leaves it at a disadvantage compared to international competitors.

“It is crucial that Australia’s contribution to the global effort is in proportion to action being taken by overseas trading rivals so as not to disadvantage important trade-exposed industries.”

The mining industry will also have to endure an effective 16% increase in fuel tax, with the off-road diesel fuel rebate being cut back to 6c a litre.

“We’ve also seen today the introduction of a new fuel tax on the mining industry,” said Hillman.

“The government faced a $4 billion black hole in carbon tax revenue and so has imposed a permanent tax in the form of adjusting the fuel excise levy. This amounts to a new tax to the mining sector – it is a 16 per cent increase in fuel tax.

“This comes on top of the carbon tax package and the upcoming Minerals Resource Rent Tax.”

Hilman said the carbon tax would limit growth in the coal industry at a time of unprecedented prosperity and do nothing to reduce global emissions.

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