Xstrata themselves said that they were closing their copper smelting operations because the Chinese had starting their own smelting operations. Lower wages in China had made the operations here uncompetitive. The impending carbon tax had nothing to do with it. It was just simple economics of the business going where the expertise is the same and the costs are lower. It's basically the same thing that happened to the steel industry.
It's hysterical to claim that anyone 'hates' these industries. The debate has been about how can we transition to a more environentally sustainable future while easing the transition for individuals, companies and the economy as a whole. The addition of green technologies (new technologies where we can potentially have a competitve advantage in expertise) will add to the economic base of the country in the longer term, not detract from it.

Not only Mt Isa but copper and uranium concentrate from SA's Olympic Dam will be sent to China. This 'value subtracting' not only denies jobs and profits to Australia but gives other countries control over our resources. Since China and India increasingly depend on Australian coal and LNG we are providing the wherewithal. Other countries merely supply cheap labour and lack of pollution controls.

One measure I think would be to carbon tax coal and LNG exports unless the importing country has a comparable system. That might be say $50 on a tonne of thermal coal and $25 on a tonne of LNG. In addition when the copper, iron or uranium is re-imported an extra carbon tariff is slapped on the goods. The case of the Malaysian rare earths plant is a bit different as they have cheap hydro not coal. Overseas mineral processing costs Australia jobs and lowers pollution standards.

There are pieces of wisdom in both Viv Forbes’ piece and the comments so far. Yes, mining companies are in the best position to make commercial decisions about where they mine and process their resources, and that includes value-adding. Yes, there is a good deal of anti-mining sentiment in Australia and it’s anyone’s guess as to what would happen if government were dominated by green views.

On the other hand, Raptor’s dreamtime of profitable green industries created in response to the departure of mineral activities is just wishful thinking.

The real problem is that the main point has been missed. We are now in an era where it is the global implications of these kinds of decisions that matter. In this particular case the question in its simplest form becomes, where are the best places, with the lowest emissions, to make the 20 million tonnes of copper that the world needs? Of course, no single nation or business can ever answer that accurately. Even a planned global economy couldn’t answer it. But normal commercial market-based decision-making will give the optimal answer, so long as the playing field is level. And for minimising emissions that means a uniform global carbon price or some equivalent mechanism.

I admit my own dreamtime element to that solution. The world won’t be getting uniformity any time soon. But there is one clear conclusion. If Australia wants to lead the world in carbon pricing (yes, there are schemes elsewhere but they are toys) then commercial decisions are going to be made that are bad for Australia and may well be bad for the planet. Lose-lose is definitely not the way to go

I'm beginning to think there is a prolonged economic cycle in a nation's history, which goes like this:

1. Relative poverty -- people realise they have to work hard and make rational decisions.

2. Hard work and rational decisions pay off with increased wealth and security.

3. After prolonged wealth and security, people lose sight of the link between prosperity and rational decisions.

4. Rational decisions come to an end and the nation heads back down towards poverty again.

As a humanitarian, I think it's great that we're giving the Chinese and Indians a chance at the profits to be made from mining. As an Australian resident, though...

These things were happening well before any Carbon taxed was thought up. Linking the two is just plain dumb. The problem is our short term thinking that we have suffered for a long time in Australia. We have no nation building vision anymore, and I see no way of getting it back.

I live is SA the last time we had any sort of vision was in Tom Playfords day, we will never see a Polly like that in Australia.
We have carer Polly now who don't believe in anything, taught in lawyer school is argue whatever side of the argument is required with equal false conviction.
Our news papers and TV’s are full over opinion writers now who are even worst, just a bunch of contrarians.

Some commenters, whether they be alarmists or locusts or whatever, are glad to point out that a carbon tax is not to blame for Xstrata's decision to close down its copper smelting and refining in Australia, even though Xstrata would have been influenced undoubtedly by its threatened imposition.

It would be interesting to see how they think that imposition of a carbon tax would improve the lot of miners, manufacturers, farmers -- in fact any business other than the financiers and inefficient renewable energy producers who stand to benefit from a carbon tax.

Sadly, Australians have to get used to having their standard of living reduced, as a consequence of being governed by very short-sighted leaders who are so misinformed that they see nothing wrong with a carbon tax -- thanks to their gullibility by failing to appreciate that there is no compelling scientific evidence that carbon dioxide emissions cause any measurable climate change.

I agree with Raptor's and some of Tombee's comments and reiterate what I have written before on this issue:

For a typical mining operation, transport fuels may account for about 5% of its costs and electricity another 5% (total 10%). A 6c per litre increase in the current diesel price (it is excise-free and costs them less than $1.00/L) would add about 0.33% to costs. These industries pay close to wholesale price for electricity, 6 – 7 cents per unit. With a $25/ t CO2 carbon price, their electricity price would go up 30% to 9c per unit adding less than 2% to total costs. With profits margins 10-25% common in the mining industry, a 2.5% increase in their cost of production is not going to break them.

From my experience in assessing energy use in mines, I know that most can save at least 10% on fuel and 5% on electricity by implementing energy efficiencies with payback times of less than 2 years. By radical redesigning of mines, replacing trucks and bulldozers with conveyor belts, slurry pipelines and cable skips, energy savings of 30% can be achieved. Such savings would more than negate the cost impact of a carbon price, as is the intention.............

Non-ferrous metal refining uses enormous amounts of electricity - More than 20% for aluminium smelting - by far the most energy and emissions intensive of our industrie. It accounting for a whopping 6% of Australia’s CO2 emissions and provides only 0.6 per cent of manufacturing employment; 1.3 per cent of the manufacturing sector’s share of GDP. Smelters include 3 of the 10 largest mineral corporations in the world and are more than 50% foreign owned. The most polluting of these are the only operations that may be forced offshore under a carbon price e.g , smelters in Victoria which for more than 25 years have made enormous profits and paid less than 2c / kWh for electricity for dirty brown coal electricity subsidized by Government. This industry, more than any other needs a carbon price as an incentive to clean up its production.

Sorry to come in again so late, but Roses 1’s comments on aluminium do sound more than a little ideological – ‘enormous profits’, ‘foreign owned’, ‘dirty brown coal’, etc. Obviously, aluminium smelting is energy intensive. About 25% of the life-cycle energy consumption is in the electrolytic smelting process itself.

The industry was encouraged in Australia (and in the early days owned) by governments of various persuasions, who wanted value added to our bauxite deposits. Carbon emissions were not then regarded as pollution. The industry was efficient and globally competitive.

Now Roses 1 says it should ‘clean up its production’. He doesn’t suggest how. Here’s a thought. Strategically locate nuclear power stations and smelters near each of the alumina refineries. That should make Roses 1 happy. Better, he could help to promote energy policies that keep Australian alumina refining and aluminium smelting operations grouped next to the three main bauxite mines, with nuclear power nearby. That ought to minimise total energy consumption and emissions while still providing the aluminium metal that the world needs (though I am not presuming to override proper commercial decisions about locating such operations). How about it, Roses1?

I thought I had read in the Australian, the day before Xstrata’s official announcement that “sources” had stated the reasons for their withdrawal were indeed based upon a loss of longer term competitiveness due to the proposed CO2 tax?

In the end of course it doesn’t matter, at least as long as there are those who can explain the economics to those without jobs.

Roses 1 demonstrates quite clearly, just how dangerous a little information can be in the hands of those who lack knowledge, common sense, context or relevance. So glad you’re not running my business.

I seem to recollect a similar set of numbers being used to explain to 1,700 steel workers at the Redcar Steel works in the UK, why their jobs had gone to Europe without compensation.

Anyway, it’s all good if we can just “clean things” up Eh?

The author makes a lot of sense. The burning questions are -What sort of Oz do we want? What are we willing to pay or to fore-go? What is better - a lot of people employed in good jobs and paying taxes, or a few billionaire Wall Street bankers and a massive welfare budget the country can't afford? It is time someone decided.

The author has given a broad brush of Oz' asset base - mining, farming, some relatively small-scale manufacturing. These contribute the bulk of the wealth base enabling infrastructure, roads, rail, housing, schools and universities, health-care, etc - which then enable tourism, foreign student education, supermarkets, etc, including your cappuccinos - and fueled by banking and investment. Why would we risk all this? What are the real alternatives?

We enjoy a relatively high standard of living, and this is both our blessing and our curse. High wages give us our standard of living, but also makes us uncompetitive on the world market in so many sectors of industry and commerce, resulting in so many industries being lost to overseas manufacturing when we should have, but for high wages, a competitive advantage - as in wool processing, leather processing, steel production, and a host of other value adding utilisations of our mineral wealth. Why do we not have these fundamental secondary manufacturing industries? Because of a lack of government foresight, and an ill-advised impatience for a fast buck. And now? Call centres.

Workers pay tax and invest superannuation - all fueling commerce. But chasing wage increases has put us on a treadmill - increasing inflation, higher CPI, higher interest rates on borrowings; wage increase .... , and so we go again.

It can be argued we are already paying a carbon tax, but just as a component of overall taxation. If we want industry to be more energy-efficient then legislate efficiency standards and enforce them. Roses1 has shed some light on the possibilities. Why has it not been done? Blinkered self-serving government.

Carbon Tax? Let's get our priorities right, please!

Dear Saltpetre, you completely destroy any rational debate. Your approval of anything has become the “kiss of death”. Why can’t you just disagree with those who grasp reality instead of pretending to agree and then going off in the opposite direction?

When you “agree with anything” you actually don’t. Just get your prevarication in order please.

Well, Spindoc, you have thrown me quite a challenge. I'll do my best. However, having read your earlier post, I'm not sure what your position is - other than that you are dead against any need for a carbon tax, and you imply a conviction that any attempt to clean up industry, or improve its energy-efficiency means shutting down and loss of jobs. I also suspect you disagree that wage restraint could help Oz to be more competitive and create more jobs - as I suspect you would consider this just a way to punish workers and increase profits for the "profiteers". My proposition is the reverse - by way of "strings attached" requiring industry to improve efficiency and productivity, and bonuses to the workers to follow from productivity gains, with improved job security and opportunity.

I am against a carbon tax - because I don't think it will achieve anything, that it is just a tax grab by this government, and that it is purely an "agreement" with the Greens under guise of concern for the climate.

I think mining is essential to our immediate and long term economic security, and therefore all reasonable measures should be taken to ensure its continuance and expansion - including if possible getting Xstrata to change its mind regarding Cu smelting at the Isa.

I believe energy-efficiency can be improved, as Roses1 has indicated (though you may disagree), but that this can best be achieved by setting standards and targets in consultation with industry, and planning required innovation - with government support where necessary, and with penalties for non-compliance where necessary. My overall proposition is to save and improve industry, for benefit of the country and the workforce, but it will require capital input by both industry and the nation (government), and not punitive taxes.

Why don't I trust our governments to get it right? Just look at what NSW and WA have done to home solar input credits - breaking a compact, and shoving it up any facade of climate credibility. Jokers all.

Sorry to complicate the discussion, but no one seems to have added the
rising cost of bunker fuel into the process.
There are already thousands of ships tired up around the world.
25 Knot design ships are sailing at 14 knots to save fuel.

The cost of shipping ore around the world will become unfundable.
Fuel cost has already caused the return of steel and furniture
manufacturing to The US due to transPacific container shipping costs.

If you cannot smelt copper here and you cannot ship it overseas then
you just import it. Either that or use aluminium wire. Hmmm.