RPT-Coal miners say Australia carbon tax treatment unfair

Sun Jul 10, 2011 5:46pm EDT

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(Repeats story first published July 10)

By James Regan

SYDNEY, July 10 (Reuters) - Australia's powerful coal mining industry on Sunday warned it was being unfairly singled out under the country's new carbon emissions trading scheme, predicting it will lead to job losses and fewer collieries at a time when buyers are paying top dollar for coal.

Xstrata , one of the country's biggest coal mining companies, said it was "disappointed at the government's lack of genuine consultation" before unveiling its plan to slap a carbon tax of A$23 a tonne on its 500 worst polluters.

Australia, the world's biggest coking coal exporter, relies on coal to generate 80 percent of its electricity, accounting for 37 percent of national emissions. Coal is also one of the nation's top export earners, worth A$46 billion in overseas sales last year.

Around 40,000 people work in Australian coal mines and a further 100,000 indirectly, according to sector estimates.

Prime Minister Julia Gillard has announced coal miners, steel and aluminium manufacturers and other heavy emitters of carbon gas polluters would pay a A$23 ($24.70) a tonne carbon tax rising annually to A$25.40, before shifting to market-based emissions regime in mid-2015.

Australia is the rich world's worst per capita greenhouse gas emitter due to a heavy reliance on coal-fired power stations for electricity.

Under the plan, some sectors, including aluminium, zinc refining and steel making will be given free permits covering 94.5 percent of average industry emissions for the first three years.

Gillard has also called for the full or part-shut down of the most emissions intensive electricity generators before 2020, removing up to 2,000 megawatts of capacity and replace older coal-fired power stations with cleaner ones.

"The Government has appeased some industries for political expediency but has ignored the concerns of Australia's biggest export industry and all of the small business people and employees who depend on it for their survival," said Ralph Hillman, chief executive of the Australian Coal Association.

"The government and Greens are imposing costs that none of our international competitors face, and cannot be justified in transitioning the Australian industry to a low carbon future," said Mitch Hooke, chief executive of the Minerals Council of Australia.

"It will simply export investment, jobs, global market share and emissions offshore."

The coal sector is worried too that a A$1.3 billion compensation package unveiled by Gillard to help the worst emissions intensive coal mines adjust is inadequate.

"Our concern is how far that is going to go," said Dylan Byrne, partner, head of a national sustainability advisory group for accountancy BDO.

"There are potentially a lot of mines in parts of Australia that will not see any of that money," Byrne said.

Miners are complaining that the added cost to control emissions comes in the midst of an up-cycle in the market.

A benchmark price settlement negotiated by Anglo American was struck at $315 a tonne for the third quarter with Asian mills, just beneath a record high of $330 agreed in the second quarter. Australian thermal coal sells for around $122 a tonne.

Australia's top coal miners, including BHP Billiton , Rio Tinto RIO.L> and Peabody Energy each sell at around the same price.

At the starting point of A$23 a tonne, the tax would increase the cost of making coal by more than A$1.80 per tonne, according to the Australian Coal Association.

The leader of the Australian Greens party, Bob Brown, has infuriated coal miners by saying he would like to see the industry shut down altogether -- a move mining lobbyists predict would cost the economy between A$29-billion and A$36-billion a year.

Alternative energy interests hailed the Gillard plan, predicting it will lift interest in building more wind farms, solar power stations and recycling centers.

"We will see solar on steroids," said John Grimes, chief executive of the Australian Solar Energy Society.

"We are finally penalising pollution and rewarding clean energy. That will deliver substantial investment in solar power and position Australia as a solar nation," Grimes said.

Simon Bennison, chief executive officer of the Association of Mining and Exploration Companies, disagreed: "Australia`s sovereign risk continues to take a battering, to the detriment of investment, whilst key trading competitor countries continue to emit high levels of carbon dioxide and not incur the same carbon pricing costs as their Australian counterparts," he said. (Editing by Ed Davies)

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