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Mining organisations have slammed proposals being considered by the Federal Government for an additional tax on thermal coal exports.

The NSW Minerals Council said such moves would harm the state’s economy and its coal mining communities while representing a significant broken election promise, unlikely to be temporary, and would potentially be extended to other sections of the mining industry over time.

Council chief executive Stephen Galilee said the mining sector was already Australia’s largest taxpayer, delivering nearly 40 per cent of the more than $68 billion in company taxes paid to the Federal Government in 2020-21.

“In NSW, taxes paid by the coal sector have also been increasing, with coal mining royalties at record levels,” he said.

“Coal royalty rates in NSW are already higher than for other minerals, and coal royalties are expected to raise over $4 billion this financial year, more than double two years ago. This is in addition to a wide range of other taxes, payments and levies paid to the NSW Government totalling well over $200 million each year.

“Coal is also NSW’s most valuable export by far. Imposing additional costs through even more taxes on NSW thermal coal exports would reduce the competitiveness of NSW thermal coal exports, damaging the NSW economy, and harming longstanding trading relationships. This would also have significant implications for other export commodities across a range of sectors.”

Galilee said that ultimately, imposing additional taxes on NSW thermal coal exports would harm mining communities, particularly in the Hunter region.

“NSW coal producers have worked hard in recent years to strengthen industry performance. This helped the sector to generally continue operations during two years of the pandemic, providing jobs and economic activity when most needed in mining communities across NSW,” he said.

“Strong industry conditions over recent times have also helped offset losses sustained during inevitable commodity cycle downturns, as experienced at least twice in the last decade. Recent strong conditions have also delivered higher direct spending by the sector across NSW with supplier businesses, and more mining jobs, including in the Hunter.

“A new, additional tax on the NSW thermal coal export sector would put all this at risk, and will be strongly resisted by the sector on behalf of NSW mining communities. ”

The Minerals Council of Australia, which last week stated that coal was not to blame for rising electricity prices, said a tax on mining would put Australia’s economic recovery at risk, and hurt the very people the government is trying to help: households and small business owners.

Chief executive Tania Constable said Prime Minister Albanese claimed he would only be looking at sensible proposals to address the cost of electricity.

“Yes it it is not sensible to slug the very sector that has propped up the economy and the Federal budget through recent uncertain times,” she said.

“It is not sensible to risk the ongoing economic recovery by threatening confidence and jobs.

“It is not sensible to place a handbrake on the economy and investment when we need the accelerator pushed.”

Constable repeated her statement that in seeking to find an answer to rising electricity prices, the government wrongly assumed that the price of coal set electricity prices.

“It is conflating two issues. More than 85 per cent of Australian coal is exported into the international market, where prices remain elevated. Those prices have nothing to do with setting the price of electricity in Australia,” she said.

“The remainder is supplied to the domestic market at a significantly lower contract or spot price to generate electricity.

“What is exacerbating the rising wholesale price of electricity is not the price of coal, nor the lack of supply, but the reduction in availability of baseload generation.”