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Australian mining sector cheers new government's plan to end carbon, coal taxes

Highlights

The Australian mining industry welcomed Saturday's election of Prime Minister Tony Abbott and his coalition's pledge to abolish the carbon tax on fugitive greenhouse gas emissions from coal mines and the Minerals Resource Rent Tax on coal and iron ore mining profits.

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The coalition of Liberal and National parties campaigned on a platform to repeal the taxes within 100 days of taking the reins of government.

"On the first sitting day of Parliament under a coalition government, I will introduce legislation to repeal the Carbon Tax," Abbott said on the Liberal party's website that included policy documentation stating the party would also rescind the MRRT.


Minerals Council of Australia CEO Mitchell Hooke said in a statement Sunday that abolishing the twin taxes would be a "positive first step," as Australia's market competitors did not face the taxes.

"The carbon tax has been a dead weight on the economy that has failed to achieve its environmental objective while adding massive new costs on the minerals sector," Hooke said.

Former Prime Minister Julia Gillard's Labor government enacted the carbon tax on industry GHG emissions at a rate of A$23/mt ($21.10) of CO2 or equivalent gases, and the 30% Minerals Resource Rent Tax on iron ore and coal companies' profits. They both went into effect on July 1, 2012.

The Labor government said it would bring forward by one year to July 2014 the transition of the carbon tax from a fixed-price to a floating-price mechanism linked to international carbon markets such as the European Emissions Trading Scheme.

INDUSTRY SAYS REPEAL WOULD SEND 'POWERFUL SIGNAL'

"Repeal of the MRRT will make a material difference to industry confidence," Hooke said. "It will also send a powerful signal that Australia is not about to relinquish its position as a premier destination for investment and a cost-competitive global supplier of minerals resources."

Hooke also welcomed the Liberal-National parties' election agenda to reform the Fair Work Act that regulates industrial relations in Australian workplaces and to streamline environmental approvals for mining projects.

The Queensland Resources Council, the representative body for coal mining companies in the Australian state, said it supported the Liberal-National parties' agenda for policy reform.

QRC said the agenda included a "globally competitive approach to emissions reductions, fiscal stability, no further tax increases and an end to the current state/federal duplication and inefficiencies in project environmental approvals."

"After ticking all the minerals and energy policy boxes during the election campaign, the newly elected Abbott government could look forward to strong support from the Queensland resources sector in implementing its agenda," QRC CEO Michael Roche said in a statement Sunday.

Outgoing Prime Minister Kevin Rudd and his Australian Labor party lost Saturday's Australian general election by a wide margin and are due to hand power this week to Abbott and his coalition.

In the 150-seat House of Representatives, Abbott's Liberal-National coalition is on course to have 86 members, up from 73 at the 2010 election, while the Australian Labor party's tally is 57 seats, down from 72 in the last poll three years ago, according to the Australian Electoral Commission's website, Monday.

Independents and smaller parties' tally in the election was three representatives, down from five at the last election, and vote-counting was still taking place in four seats, the AEC said Monday.

The Liberal-National parties might encounter some opposition in the Australian Parliament's upper chamber to their plans to strike down the taxes, as the Labor and Green parties together retain a majority of votes in the Australian Senate until July 2014.

Senators elected at Saturday's poll take their seats next July and include an influx of up to seven smaller party members who could hold the balance of power in the 76-member chamber in which the Liberal-National parties are expected to hold 33 seats, according to a projection by the ABC news service.

--Mike Cooper, michael.cooper@platts.com

--Edited by Meghan Gordon, meghan.gordon@platts.com