New South Wales Minerals Council, representing the Australian state’s mining industry, said it is `extremely concerned” the government is still considering higher coal levies that will heighten risk and deter investment.

The government needs to recognize the changes that have occurred in the commodity and financial markets over the past three months, the council said today in a statement released after a meeting with state Premier Nathan Rees. The plan, which may boost costs by A$2 billion ($1.3 billion) over five years, risks “taxing an industry into oblivion,” it said.

Under the plan, to be announced in the state’s mini-budget on Nov. 11, a 10 percent charge will be introduced on all coal valued at more than A$100 ($67) a metric ton, the Australian Financial Review said today. It will also replace a three-tier levy on production with a single, higher rate of 8 percent, it reported. The proposed royalty increase comes on top of rising costs for miners caused by bottlenecks at Newcastle port.

“Port constraints at Newcastle must be resolved before a single additional cent is extracted from the industry,” the council said in the statement. “Resolving this issue will deliver immediate benefits for the industry and NSW taxpayers.”

Xstrata Plc, the world’s biggest exporter of power-station coal, Rio Tinto Group and BHP Billiton Ltd. are among companies that produce the fuel in New South Wales.

Prices Halve

Minerals Council Chief Executive Officer Nikki Williams and Chairman Colin Bloomfield, president of BHP Billiton Illawarra Coal Holdings, attended the meeting, as well as other members of the council’s executive committee who hold senior posts at major mining companies in the state, said Lancia Jordana, a spokeswoman.

Prices for thermal coal exported from Newcastle, the world’s biggest export harbor for the fuel, were at $100.83 a ton in the week ended Oct. 31, down by almost half from a record $194.79 in July, according to the globalCOAL NEWC Index. The International Monetary Fund yesterday predicted a simultaneous recession in the U.S., Japan and the euro region next year, the first such event in the post-World War II era.

The mining industry will deliver A$920 million in royalties to New South Wales this year, rising to more than A$1.3 billion next year, the Council said. About 90 percent of that is from coal, it said. For every 10 million metric tons in additional capacity made available at Newcastle, the state would receive a further A$110 million in levies, the council said.

Any increase in royalties would add to sovereign risk for existing and potential mining companies in the state and deter investment, it said.

Find More Mining News :