BSL Bluescope Steel Limited

Industry reaction to the Australian government's carbon tax package was mixed Sunday, with miners saying it would chase away investment, steelmakers welcoming assistance for their industry and others still considering what impact it might have.

The Minerals Council of Australia, whose members include mining giants BHP Billiton (BHP, BHP.AU), Rio Tinto (RIO.AU) and Xstrata PLC (XTA.LN), said the tax would cost the industry A$25 billion to 2020 and 20,000 jobs.

The council's chief executive, Mitch Hooke, said the new tax also meant Australia would become the only country in the world to tax methane emissions from coal mines.

"The only way in which you will reduce methane emissions in coal mines in Australia is to close them down," Hooke said. "A new tax will go a long way to impeding investment and jobs and growth and closing down coal mines in Australia."

Xstrata Coal, which has interests in coal mines in Queensland and New South Wales states, said in a statement it was reviewing the tax package to determine the impact on its business.

The company, the world's largest exporter of thermal coal, according to its website, said it was disappointed by a lack of consultation by the federal government in designing the package.

"We have consistently advocated for a scheme that protects all exposed export industries, invests in low emission technologies; and provides a phased introduction with clear longer term emissions reduction targets," company spokesman James Rickards said.

Australian steel company BlueScope Steel Ltd. (BSL.AU) said a A$300 million assistance package to minimize the impact on steel producers of the carbon tax would "materially" reduce the overall cost of the tax on the company.

The federal government's Steel Transformation Plan, or STP, would provide four years of transitional support for steelmakers and provide support for innovation, investment and production.

"In the STP (the government) has produced a package that, if implemented as explained to us, deals with the steel sector's carbon tax issues in a significant way," BlueScope Chief Executive Paul O'Malley said in a statement.

The company said the STP would be split roughly 60% for BlueScope and 40% for fellow steelmaker OneSteel Ltd. (OST.AU).

Retailers, who are already suffering from a downturn in spending by cautious consumers, were worried the tax could further dent consumer confidence.

"Much of the uncertainty around the carbon price may now lessen, but the negativity of the 'anti' campaign will continue and that may be enough to convince Australians they need to keep saving their pennies," said Australian National Retailers Association Chief Executive Margy Osmond.

The Australian Food and Grocery Council, representing the nation's food, drink and grocery manufacturers, said the carbon tax would increase costs through the supply chain, predominantly through increased power prices.

But the council welcomed the decision to exclude transport fuel until 2014 and a A$150 million program over six years to help industry become more energy efficient.

-By Gavin Lower, Dow Jones Newswires; gavin.lower@dowjones.com; 61 3 9292 2095

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