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Published: Wednesday May 28, 2014 MYT 5:20:02 PM
Updated: Wednesday May 28, 2014 MYT 5:20:02 PM

Australia's opposition leader concedes carbon, mining taxes to go

CANBERRA (Reuters) - Australia's opposition Labor Party on Wednesday said two contentious taxes on mining and carbon emissions introduced during its years in power would likely be repealed this year.

Before being elected prime minister last September, Tony Abbott made abolishing the taxes a centrepiece of his campaign.

But there have been questions over Abbott's ability to meet his promises, given signs of opposition from independent lawmakers including billionaire Clive Palmer's party, which will hold the balance of power in the upper house from July.

"The mining tax, I suspect will be repealed despite Labor's position," opposition leader Bill Shorten said in response to questions at a meeting of mining executives in Canberra.

Shorten also said that he believed the carbon tax would go this year, after a new upper house senate is sworn in July.

Opponents of the carbon tax say it has added to the costs facing industry and the public and done little to cut emissions, something disputed by its supporters.

Greenpeace environment director Ben Pearson said he was disappointed that Shorten had "put out the white flag" so soon.

"There was an opportunity to tell the world that an industrialised country like Australia was not headed backwards on the environment," Pearson said. "That's now been lost."

Global miners with bases in Australia, such as BHP Billiton and Rio Tinto have said the taxes are out of step in the aftermath of a decade-long mining boom.

"This is really quite heartening to hear the leader of Labor concede on these tax issues" said Fred Palmer, senior vice President of government relations for Peabody Energy Corp.. Peabody owns coal mines in eastern Australia.

A global cool-off in metals and coal prices has removed much of the wind from the sails of the mining industry, where the number of major resource projects that have been given a green light has fallen by almost one third since October alone.

Under the Labor party, Australia slapped a "super profits" tax on producers of iron ore and coal -- Australia's two most lucrative exports -- and introduced a carbon tax despite fierce opposition from industry-funded lobby groups. "This was a bad idea that reduced Australia's ability to compete with other countries," said Andrew Michelmore, chairman of the Minerals Council of Australia. "It was growth in mining exports, principally coal and iron ore, that helped Australia through the worst of the global financial crisis."

Across Australia, some 12,000 jobs have been lost in the last two years as coal mines have closed, while iron ore prices broke below $100 this month to hit the weakest since September, 2012.

Michelmore is also managing director of MMG Ltd, a Chinese state-run company owning some of Australia's biggest mines. In March, Labor and the Greens Party combined to vote against the repealing the carbon tax. But on July 1, the Greens will lose the balance of power and Palmer United Party steps in to crucial upper house seats. The Palmer United party has not yet made clear what its position is on repealing the carbon legislation, though Palmer, who made his fortune in mining, has been critical of the tax. Palmer could not be reached for immediate comment.

(Editing by Ed Davies)

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