Miners unsure about Rudd’s carbon tax announcement

The Australian resources sector seemed ambivalent to the announcement that the Kevin Rudd-led government would fast-track the move to a floating carbon price, saying it gave little comfort that fundamental flaws eroding the competitiveness of the country’s industry would be fixed.

Over the weekend, Rudd announced that his newly instated government would axe the fixed carbon tax and accelerate an emissions trading scheme, saying it would take the cost-of-living pressures off Australians, while still protecting the environment.

The fixed-price carbon tax, which the government approved under Julia Gillard’s watch in 2011, puts a price on emissions of A$24.15/t and would have moved to a floating price in July 2015.

Details of the new scheme are yet to be released.

Queensland Resources Council CEO Michael Roche said that the industry body could not pass definitive judgement on the new carbon pricing plans in the absence of answers to some questions of detail.

He noted that some of the issues that needed clarification included: the adoption of the European carbon price, whether the new coal pricing would continue to apply to fugitive emissions from coal mines and whether Australian firms would be locked into trading at least 50% of their carbon emissions locally.

“If the federal government’s answers to each of these questions is no, then clearly the intent is no more than a political fix in the shadow of an election, not the fundamental re-think that is so badly needed to ensure Australia’s trade-exposed industries can be internationally competitive,” said Roche.

He added that the Rudd government had the opportunity to lift a discriminatory burden on the Australian coal industry at a time when coal producers were facing the most difficult market conditions in more than a decade.

The Association of Mining and Exploration Companies also noted that the changes to the carbon tax were not enough to address the sector’s concerns.

CEO Simon Bennison has called on the government to fully rescind the Clean Energy Future plan, saying, also, that the part removal of the diesel fuel credit arrangement should be reinstated to pre-carbon-tax levels as soon as possible.

“This will go a long way to recovering some of the lost competitiveness that has occurred over the past few years, as a direct consequence of this and other public policy announcements targeting the Australian mineral exploration and mining sector. These announcements have also dented much needed investor and banking confidence in the industry.”

Bennison pointed out that diesel was a major business input, as it is a primary source of energy for mining and exploration companies, representing between 4% and 7% on typical mining projects. The cost was, however, more pronounced for smaller miners and mineral exploration companies, which, in many cases, have no other option than to use diesel fuel for their essential energy requirements.

Opposition leader Tony Abbott, who continues to call for the complete scrapping of a carbon tax, described the plans to move forward the planned changes to the carbon tax by one year as a “con”. 

“Mr Rudd can change the name but whether it is fixed or floating, it is still a carbon tax.”