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.