Moranbah North power station at Anglo American's Moranbah North colliery in Queensland generates electricity from methane-rich gas that is released during mining operations. Anglo has warned that Australias carbon tax plans could force it to halve investment there.

Anglo American’s push yesterday for “a more manageable approach” to carbon pricing in Australia echoes the position of the mining industry in South Africa: that the country should not rush to introduce a carbon tax ahead of competitors.

Australia is embarking on its second attempt at carbon pricing after the abandonment of an emissions trading scheme by the previous administration. Stiff opposition from Australian industry is a likely indicator of the battle looming in South Africa.

Anglo American chief executive Cynthia Carroll warned that Australia’s carbon tax proposals could halve the group’s $4 billion (R26.8bn) investment programme as she met Prime Minister Julia Gillard.

Similar concerns have been raised by South African mining and mineral beneficiation heavyweights, which have said a carbon tax could “lead to South African companies beneficiating less, or relocating their smelting or beneficiation production overseas to remain competitive”. The Department of Trade and Industry’s industrial policy action plan envisages mineral beneficiation as a pillar of job creation.

The warning about disinvestment came from the industry task team on climate change, representing eight mineral-related companies including BHP Billiton, Exxaro, PPC and Anglo American, in a recent written response to the National Treasury’s carbon tax discussion document.

The Treasury kicked off the carbon pricing discourse last year with a proposal to tax carbon at R75 a ton of greenhouse gas emissions, rising to R200 a ton (using 2005 prices as a base). This appeared to be the most appropriate mechanism to reduce emissions at least cost to the economy, it said.

In its response, Anglo American urged that a carbon tax be “phased in sensibly” to facilitate the transition to lower-carbon technologies and minimise the inflationary impact.

Noting that a R200-a-ton tax amounted to $115 for every ton of export coal, compared with an average thermal coal world price of R75 a ton in 2010, Anglo American said South African thermal coal would be rendered uncompetitive on world markets. The company called for South Africa’s export coal to be exempt from a carbon tax.

The industry task team on climate change said the lack of a global agreement on carbon pricing exposed export and domestic industries to unfair market competition. To achieve a level playing field, it advocated border tax adjustments and exemptions for sectors.

The Chamber of Mines yesterday urged the government to beware of “trying to get something done by December”, when the eyes of the world will be on the country’s climate policies during South Africa’s hosting of global climate talks in Durban.

“I think South Africa must be very cautious about trying to be a frontrunner on carbon taxes when most of our major competitors haven’t done it yet,” said Chamber of Mines chief economist Roger Baxter.

The mining industry accepted the precautionary principle around mitigating climate change and believed South Africa could be a world leader in dealing with climate change, “but not necessarily through a carbon tax”, Baxter said.

Anglo American spokesman Pranill Ramchander said South Africa’s carbon pricing policies should be based on robust facts.

“An effective carbon abatement policy requires something other than just a tax. We encourage government to think about a suite of policies, including standards, subsidies and public investment. These policies need to be appropriately sequenced… to achieve the maximum abatement at the lowest possible cost,” Ramchander said.

ArcelorMittal South Africa spokesman Themba Hlengani said the steel maker viewed the carbon tax proposal as “unworkable” and had submitted its views to the government. It had the potential “to seriously impact on our profitability if pushed through… (and) undermine our competitiveness against both developing and developed country steel producers, which do not currently confront such a tax burden”. - Ingi Salgado