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Coal ban could cost Australia A$36bn/y, 200 000 jobs
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4th July 2011
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PERTH ( − Closing all coal mines in Australia would cost the country’s economy between A$29-billion and A$36-billion a year, the Minerals Council of Australia (MCA) said on Monday, citing a report by economic analysts Sinclair Davidson and Ashton de Silva.

The report also found each job in the coal industry would cost 6.5 jobs in the economy as a whole, with almost 200 000 jobs threatened if coal mining was banned, as proposed by Greens leader Bob Brown.

“The loss of corporate income tax and increase in welfare payments would constitute a negative A$6-billion impact on the federal budget. For every A$1 of income lost in the coal mining industry, A$3.92 of income will be lost in the economy as a whole,” Davidson warned.

He further noted that a modest decline in coal exports during the first quarter of this year was blamed for the negative economic growth, with Treasurer Wayne Swan saying, at the time, that around A$9-billion was lost in revenue as a result of the weather-related issues that affected coal mining in the beginning of this year.

“On the other hand, we show that coal exports increased dramatically during the recent financial crisis. Without that increase in coal exports, Australia would almost certainly have experienced a recession with, at least, three consecutive quarters of negative economic growth,” Davidson added.

The report also found that Australia’s comparative advantage in coal exports has eroded in the past ten years, which Davidson and De Silva attributed to poor policy developments in Australia.

“It is clear that policy makers have little regard for mining and this has encouraged poor policy making. Coal mining performs well despite the poor policy environment. It is clear, however, that poor policy will over time undermine Australia’s economic opportunities.”

However, Davidson said that at present, those policies have not been a deliberate attempt to undermine the industry.

“The Greens, and to a lesser extent the government, propose policies that are deliberately intended to disadvantage coal mining. We argue that given the competitive nature of the world coal market the cost of those policies should be incurred in Australia, and will give rise to few, if any global environmental benefits.”

The federal government was currently considering two policy changes that would directly affect the coal mining industry. The first was the introduction of a 30% mineral resources rent tax on the super profits of coal and iron-ore producers.

The second policy consideration was the introduction of a carbon tax, which has caused miners and industry bodies to warn of severe job losses and revenue loss expectations.

The federal government, backed by The Greens, has said that the country would increase its reliance on cleaner coal and carbon capture and storage technology, while making use of renewable energy sources for electricity generation.

“The argument that renewable energy could easily replace coal-powered energy is fanciful,” scoffed Davidson.

“Australia has little installed capacity in renewable energy compared with coal-powered energy. In addition, renewable energy is very expensive and technologically uncertain.”

Black and brown coal remains the dominant fuel source in Australia, and accounts for around 38% of production, with gas accounting for a further 23% of electricity production. Around 5% of the total energy mix is made up from renewable energy sources.

Prime Minister Julia Gillard has previously said that coal mining had a future in Australia. She noted that the federal government would be working with industry to transition to clean coal technology.

Edited by: Mariaan Webb


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