Australian Coal May Face $3.5 Billion in Carbon Costs

Source:

"The impact is going to be closure of some mines, shortening of mine lives, reduced investment and further job losses."

Australia's coal-mining companies face costs of about A$5 billion ($3.5 billion) in the first five years of the nationís planned emissions-trading system, threatening jobs and investment, an industry group said.

Additional costs will increase job losses beyond the 3,000 reductions so far due to the commodity-market slump, Ralph Hillman, executive director of the Australian Coal Association, said today in Sydney. As many as 10 mines risk closure because they won't be able to pass on the costs to customers, he said.

Australia is due to introduce a national emissions trading system on July 1, 2010, to help reduce gases blamed for global warming.

"The impact is going to be closure of some mines, shortening of mine lives, reduced investment and further job losses," Hillman said at a conference. "We are competing in a highly contested global market."

The A$5 billion estimate assumes a A$25 per metric ton cost for carbon emissions and represents the cost to mining companies of buying permits to cover emissions, he said.

Australia has lost a 15% share of the seaborne thermal coal market to Indonesia since 2002 because of bottlenecks in rail and port export systems, Hillman said. The country's market share is set to drop further with the introduction of carbon trading, he said.

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