The carbon tax is just one factor for miners

The mining industry walked a tight rope in its opposition to the now-repealed carbon tax, highlighted by its quiet campaign against the tax's burden on cost competitiveness.

The mining industry walked a tight rope in its opposition to the now repealed carbon tax.

Not wanting to be seen as climate change deniers, the industry was reserved in its criticisms of the tax, a mechanism meant to drive down carbon emissions by putting a price on carbon.

There was none of the wailing and campaigning that the industry launched against the mining tax which is yet to be repealed. But the carbon tax was just as despised, imposing as it did a burden on the cost competitiveness of the industry compared with that of its overseas peers.

Not wanting its 'green' credentials to become a big issue, the industry embarked on a 'softly, softly' campaign that essentially went along the lines that there was no denying the science around global warming, and that a price on carbon was one of the weapons that could be used in the battle to limit emissions, while also meeting the surge in demand for commodities from China and elsewhere.

But there some important caveats to all that and they were if Australia was to have a carbon tax, it had to be trade-friendly, revenue neutral, and non-distorting. It also had to be framed in such a way that did not hamper Australia’s economic growth and in a way that did not erode the country’s competitive position.

The tax struggled on all those points. While there were no big project cancellations or closures since its start-up in 2012, there is no doubt that the carbon tax was sitting there in the background as a key consideration for future investment plans.

Alcoa did not blame the carbon tax for the closure of the Point Henry smelter near Geelong. But it would have been a factor among the pros and cons of considering new investment in a project that was already struggling.

BHP Billiton did not blame the carbon tax for the $30 billion cancellation of the Olympic Dam project in South Australia. But it too would have been a consideration, and a negative one at that until the rest of the world gets on board with a predictable and simple price signal on carbon.

This article was originally published at The Australian