Australia's nickel industry is on the rebound but faces the prospect of being shackled by rises of up to 50% in its total tax liability and up to an additional AUD 2 million cost per mine as a direct result of the proposed carbon tax.

Speaking in Perth at the Paydirt Australian Nickel Conference, Mr Reg Howard Smith CEO of the WA Chamber of Minerals and Energy said that the nickel industry had escaped the MRRT, but the impacts of the carbon tax would be direct hits.

He said that "Although only nickel projects producing in excess of 25,000 tonnes of carbon per year will be required to obtain permits, every project will feel the impact through on costs from other sectors and from the reduction in the diesel off road fuel rebate."

He said that "The Chamber is aware that the Federal Government is currently considering the options for classification of nickel under the Emissions Intensive Trade Exposed. However, we are yet to receive an answer on what assistance may be available to mitigate this new tax's impact on nickel producers. The tax's reduction in the diesel rebate will be particularly harmful for the nickel industry, with many smaller remote operations relying heavily on diesel for electricity generation."

Mr Smith said that "The Chamber supports measures that will deliver genuine environmental outcomes at the least cost to industry but we do not believe the carbon tax will deliver this. For the nickel sector, it is part of a broader Australian resource play facing a proposed carbon price of AUD 23 per tonne, the highest in the world and a significant compromise to our international competitiveness. There remains a glaring lack of adequate transitional assistance for trade exposed industries, especially given the significant starting price of AUD 23 per tonne, and, there is indecision in consolidating or removing as part of the introduction of a carbon tax, the significant number of costly and inefficient greenhouse gas abatement measures."

He said that "For an average nickel operation, some companies are citing examples of 50% increases in their total tax liability and up to an additional AUD 2 million per operation to account for the changes in the diesel fuel rebate. Despite this, the policy remains largely unchanged and it looks like the legislation will be passed with a vote targeted in the House of Representatives for October 12th 2011."

(Sourced from www.mineweb.com)