The Rudd government's scheme for carbon trading scheme has come in for criticism from mining giant Rio Tinto for its prohibitive price tag. Under the scheme the mining company may have to close some of its long-life coalmines around 2020 and cost the company A$2.9 billion over the next decade.

Chris Renwick, Coal & Allied chairman said at he company's annual general meeting that the fundamental cause for concern was the exclusion of coal as an emission intense trade exposed industry though it meets all criteria for admission. He added that it was a very major concern.

According to the company, the scheme would cost it A$130 million in 2010-11.

The CPRS could potentially undermine Australia's economic growth to the detriment of the nation, Rio Tinto's Australia managing director Stephen Creese said in Rio's submission to the Senate committee inquiry on draft CPRS legislation.

Rio said many of its other units not classified as emissions intense and trade expose (EITE) activities could see cost escalations of A$1.5 billion over the next decade under the scheme.

There could also be additional costs if permit allocations for alumina are not correctly implemented. It could see a further A$1 billion increase in costs over the next decade while another A$430 million could be taken up by EITE allocation erosion could cost.

Renwick said Australia was the only country which included coal seam methane in the trading scheme. Coal seam methane, released during mining makes up to two-thirds of greenhouse emissions he added.

Methane is 21 times more potent than carbon dioxide as a greenhouse gas he said.

Meanwhile despite recent benchmark price decreases, Australian coal production continues to slide on deeper production cuts as demand for coal continues to fall.

US-based Peabody said it would produce 20 million to 23 million tonnes or coal at is Queensland and NSW mines this year on top of production target cuts of 2 million tonnes in January this year.
 
Other miners, including BHP Billiton, Xstrata and Rio Tinto, have already cut coal production.
Peabody said jobs would not be affected.

It said the Pacific seaborne coal market remained stronger than the Atlantic market which was to Australia's benefit.
 
After reporting a first quarter profit of A$194 million, the company said the it believes China could likely become a net importer or coal in 2009.

The hard coking coal benchmark price was recently pegged at A$125 a tonne, down nearly two-thirds on last year.