Australian Mines: Carbon Tax is Like Doomsday
By Esther Thomas | October 12, 2011 5:15 PM EST
To say it has made Australia's economy what it is today is an understatement. Its contribution of 5 per cent into the country's GDP is fair enough proof of what the Australian mining sector has done for the country.
But with the carbon tax plan passing Australia's lower house Wednesday and near final approval, Australia's mining companies are wont to think, did we not deserve some pat on the shoulder from helping anchor Australia into its economic greatness now?
Business, particularly Australian mining groups, had vehemently oppposed the carbon scheme, arguing much more is at stake than just being able to comply its yearly tax declaration responsibilities. They say mounting the carbon tax will close coal mines, risk thousands of jobs to a nation whose unemployment rates continue to rise, push power bills to soar and harm Australia's international competitiveness.
Understandably, Australia's mining companies are seen to be most harmed by the carbon tax. For after all, Australia is the world's biggest coal exporting nation. It practically lives and breathes coal.
"The carbon tax will undermine the competitiveness of Australian coal mines with no reduction in the amount of global greenhouse gas emissions from coal mining," Australian Coal Association Chairman John Pegler told Reuters.
The Minerals Council, composed of Australia's major mining companies such as BHP Billiton and Rio Tinto, said the vote would weaken export competitiveness and cost the mining sector A$25 billion by 2020. Australia's largest export markets are Japan, China, South Korea, India and the USA.
Added to that is the global contraction in demand for commodities fuelled by fears of another recession of pandemic proportions.
And just recently, federal and South Australian governments gave BHP environmental approval to proceed with its $30 billion plan to expand and develop the Olympic Dam mine. It doesn't take a math genius to figure how much the mining giant will shell out to cover for capital expenditure and carbon tax payments should the Olympic Dam mine expansion push through.
For the mining industry, the carbon tax plan will hurt coal investment in the country.
The carbon tax will be imposed on 500 of Australia's biggest polluters from July 2012, before going to a carbon trade scheme in 2015.
The carbon legislation has yet to pass the Senate in a vote due in mid-November.
Australia accounts for only around 1.5 per cent of global carbon releases, but is the world's biggest per capita polluter as 80 per cent of its electricity generation relies on coal.
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