Bloomberg reported that Australia's planned carbon tax may reduce the value of the coal industry by about AUD 8 billion as producers including Xstrata Plc and Anglo American Plc bear higher costs.

Mr Ben Willacy, Wood Mackenzie' Australasia coal supply lead analyst, said that "This is an average of a 4% reduction in net present value of coal companies' Australian portfolios."

Prime Minister Ms Julia Gillard plans to charge companies an initial AUD 23 a tonne of carbon dioxide from July 2012 before moving to an emissions trading system by 2015. Coal mining companies in Australia, the world's largest exporter, must pay for fugitive emissions gas emitted naturally from coal operations, while receiving AUD 1.3 billion in compensation, with the biggest polluters getting assistance over six years. The effect of carbon pricing will vary significantly depending on gas emissions from different mines, with gassy underground mines hit hardest, including those operated by Caledon Resources Ltd. and Gujarat NRE Limited.

Operators with open cut mines, including BHP Billiton Limited Macarthur Coal Limited and Aston Resources Limited, will be less impacted by the tax and those with so called non gassy underground mines will be least affected.

Mr Willacy said that "Companies in the early stages of project planning are likely to re evaluate their investments in new coal mines, particularly underground thermal projects."

The Minerals Council of Australia said that the tax will make certain projects uneconomical and cost jobs. The Australian Coal Association said overseas coal buyers may switch to other nations, forcing mine closures. Australia will increase the charge by 2.5% a year, plus inflation, through to 2015. The country will then switch to a cap and trade system, while providing about AUD 47 billion through 2020 to help households and industries and spur investment in renewable energy. The government also plans to cut a fuel rebate on diesel.

(Sourced from www.bloomberg.net)