Was the carbon price partly responsible for the closure of the Wilkie Creek coal mine? > Check the facts
Who: “Whilst the carbon tax was not a primary cause of the closure, it represents a substantial burden on an export-driven mine.” A company spokeswoman
The claim: That the carbon price is a substantial burden on the coal mine and was partly responsible for the decision to shut the mine.
The facts: According to an article in The Australian the Wilkie Creek thermal coal mine produces 1.5 million tonnes of coal annually. The thermal coal price was expected to average around $85 per tonne this year. This means that revenue from the mine for the coming year is expected to be about $127.5 million. The article also says the carbon price costs the mine about $3 million per year. This means that the carbon price paid represents about 2 per cent of the mine’s revenue.
The mining boom has increased the costs of mining in Australia, particularly for things like labour and transport to market. The price of thermal coal has also fallen recently. Last year it fell from $100 to $85 per tonne. This fall in price would have reduced the mines revenue by 15 per cent, a much bigger impact on mine revenue than the carbon price.
The finding: The carbon price is unlikely to have been a material factor in the decision to shut down the mine.
Discussion of evidence: The government is currently attempting to repeal the carbon price. If the carbon price is repealed then that part of the mines costs would vanish. If the Senate does not pass the repeal legislation the opposition has offered to end the fixed price period and move to a floating carbon price. This will reduce the carbon price by about 80 per cent and hence substantially reduce the mines carbon price bill.
The carbon price made up only a small part of the total costs of the mine. The rising costs of mining labour and other mining costs because of the mining boom would have had a far greater effect on increasing mining costs. The price of thermal coal has also fallen. These are the factors that would have influenced the decision to shut the mine.