Australia's nickel industry is on the rebound but faces the prospect of being shackled by rises of up to 50% in its total tax liability and up to an additional $2 million cost per mine as a direct result of the proposed carbon tax. Speaking in Perth at the Paydirt Australian Nickel Conference, theChief Executive of the WA Chamber of Minerals and Energy, Reg Howard-Smith, said the nickel industry had escaped the MRRT, but the impacts of the carbon tax would be direct hits. "Although only nickel projects producing in excess of 25,000 tonnes of carbon per year will be required to obtain permits, every project will feel the impact through on-costs from other sectors and from the reduction in the diesel off-road fuel rebate," Mr Howard-Smith said. "The Chamber is aware that the Federal Government is currently considering the options for classification of nickel under the Emissions Intensive Trade Exposed," he said. "However, we are yet to receive an answer on what assistance may be available to mitigate this new tax's impact on nickel producers. "The tax's reduction in the diesel rebate will be particularly harmful for the nickel industry, with many smaller remote operations relying heavily on diesel for electricity generation. "The Chamber supports measures that will deliver genuine environmental outcomes at the least cost to industry but we do not believe the carbon tax will deliver this. "For the nickel sector, it is part of a broader Australian resource play facing a proposed carbon price of $23 per tonne - the highest in the world and a significant compromise to our international competitiveness. "There remains a glaring lack of adequate transitional assistance for trade exposed industries, especially given the significant starting price of $23 per tonne, and, there is indecision in consolidating or removing as part of the introduction of a carbon tax, the significant number of costly and inefficient greenhouse gas abatement measures. "For an average nickel operation, some companies are citing examples of 50 per cent increases in their total tax liability and up to an additional $2 million per operation to account for the changes in the diesel fuel rebate. "Despite this, the policy remains largely unchanged and it looks like the legislation will be passed with a vote targeted in the House of Representatives for October 12th." On the nickel sector's recovery, Mr Howard-Smith said that while it had not succumbed in recent times to any of the historic Poseidon-esque bubbles, the Western Australian nickel industry, which underpins national production, had faced its share of challenges following the 2008 GFC. "The nickel price peaked in May 2007 at almost US$24/lb, plummeting to US$4.40/lb by December 2008 and recovering since, but only to around US$8/lb currently," he said. "As commodity prices and financial markets are volatile at the moment, there may be some more peaks and troughs to come - changes which have of recent times seen BHP Billiton Nickel West sell its Ravensthorpe operations to First Quantum Minerals and Norilsk Nickel effectively closing its operations in Western Australia. "Despite this volatility, nickel continues to make a very important contribution to the Western Australian economy and accounts for 5% of total minerals and energy exports, our fourth most valuable commodity export at over $3.66 billion; and directly employs 8,200 people. "Nickel also stands out as a commodity which undergoes substantial secondary processing in Western Australia, adding value to our commodity exports and providing employment for many local people - all at a time it has had to fight off competition from international producers of the cheaper nickel substitute, nickel pig iron." Mr Howard-Smith said the Chamber remained committed to working with the WA Government to unblock environmental supply chain management issues for nickel at the main export port of Esperance. The CME has been working with all users of the Esperance Port, nickel producers in particular, to provide a direct line of communication to the Port's management and the State Government to ensure port operations, cleanup and ongoing planning requirements are being investigated. "We are pleased to be involved in this process and hope the Port continues to move away from the issues that have plagued it for many years," Mr Howard-Smith said.

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