Carbon tax mixed blessing for Gujarat

GUJARAT NRE Coking Coal has confirmed it would be eligible for assistance from the federal government’s $A1.3 billion coal sector jobs package based on a 0.1 tonne of carbon dioxide fugitive emissions allowance.

Lauren Barrett
Carbon tax mixed blessing for Gujarat

The announcement comes after Gujarat reviewed government-provided carbon tax information relating to its underground coal mines in the Illawarra region of New South Wales.

Gujarat said the carbon tax was a serious consideration for the company but it was important that it was considered in light of “mitigating factors and opportunities”

The six-year assistance package represents about 7% of the estimated $18 billion the associated carbon tax will bleed from the industry over nine years yet it might help prevent some significant mine closures before the next federal election.

Under the coal sector jobs package Gujarat would seek the maximum allowance of 80% of the fugitive emissions above 0.1t CO2 per tonne of saleable coal.

Gujarat said it was talking with the government to ensure any allowance provided by the jobs package would relate to actual production capacities consistent with historical capabilities.

Opportunities related to safe underground mining have been identified to enable its NRE No. 1 and NRE Wongawilli mines to manage future emissions and reduce total greenhouse gas emissions.

Gujarat’s prediction of the assistance package confirms a recent Macquarie Private Wealth analyst report which used Illawarra coal miner Gujarat as a test case for possible impacts from the carbon tax.

It believed Gujarat’s two underground mines would be part of the 25 mines the government expected to receive CSJP assistance.

However MPW also said the carbon tax would slash its net present value estimate for Gujarat by 20-65%.

NSW Minerals Council CEO Dr Nikki Williams said the federal government should now admit the real impact of the carbon tax.

“The federal government said we were scaremongering when we flagged our concern for the 3000 New South Wales coal mining jobs that are at risk, but the New South Wales Treasury modelling now shows that loss could be replicated tenfold across the State’s economy,” Williams said.

NSW Treasury has found the mining regions of the Hunter, the Illawarra and the Central West will be hugely exposed by the carbon tax. Its modelling shows that future mining growth would fall to around 60% of what it would have been. Some 18,500 jobs in the Hunter region alone could be blown away by 2020 and 31,000 jobs lost across the state.

An analysis of the state’s top-20 merchandise exports, worth a collective $21 billion, showed that more than 64% faced the full force of the world’s highest carbon costs under the federal government’s new tax, Williams said.

Minerals exports from NSW worth nearly $10.3 billion – almost half of the State’s top 20 merchandise exports – will be exposed to carbon costs well ahead of their international competitors.

Farm exports worth $3.2 billion (15% of NSW merchandise exports) will also face higher direct and indirect energy costs, while the program that is supposed to ensure our export industries remain competitive will only cover 20.5% of the top 20 merchandise exports.

“The coal industry is this state’s biggest exporter and yet it is being saddled with the world’s biggest carbon tax for no environmental gain,” Williams said.

“Modelling from both the industry and the New South Wales government proves that this tax will stunt the growth of the minerals sector in this state at a time when greater royalty returns to New South Wales would help to dig the budget out of its big black hole.

“Our analysis of the state’s top merchandise exports shows that the carbon tax reaches across the New South Wales economy, affecting agriculture, the minerals industry and manufacturing, yet almost 80 per cent of the state’s top 20 merchandise exports will receive little or no assistance.

“It is becoming increasingly clear that the carbon tax will cripple economic growth and put thousands of jobs at risk, especially in regional New South Wales.”


A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.


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