The mining industry continues to be a major driver of the Australian economy generating over A$130 billion in export earnings in 2008/2009. However, the industry has been cited as a significant contributor to green house gas emissions. Australia's proposed carbon trading scheme, the Carbon Pollution Reduction Scheme (CPRS) will financially impact on mining operations; this calls for a holistic planning approach for mining operations taking into account the impact of the emissions trading scheme. Since carbon trading is a new area of study, particularly within Australia, the quantitative effect of the CPRS on the mining industry is uncertain and current mine planning practices do not directly consider emissions. This paper presents results of the study into the impact of the CPRS on a hypothetical large scale open pit operation, using a spreadsheet model based on linear programming and simulation. By varying the production rates, life of mine (LOM), carbon price and ore grades among other variables several scenarios were simulated to determine the impact of emissions trading scheme on the net present value of the project. This study found that the adoption of the proposed Carbon Pollution Reduction Scheme could impact mining operations in Australia by a three per cent to six per cent reduction in net present value, for carbon credit costs of $25/t to $50/t respectively. While the six per cent reduction in net present value for a mining operation is significant, rising fuel prices have had a similar effect in recent years. The most energy-intensive processes are the milling circuit and the flotation concentrator circuit. These processes are jointly responsible for up to 60 per cent of the total emissions, depending on the production rate and the level of offshore processing conducted. Clearly, the introduction of the CPRS makes it is imperative for mining companies to assess the impact of carbon emissions on a mining project during mine planning._x000D_
FORMAL CITATION:Chanda, E, Ball, F, Dunstan, J, Maier, H, Mumford, P and Shaw, C, 2010. The effect of the Australian carbon trading scheme on a large scale open pit mining operation, in Proceedings Mine Planning and Equipment Selection (MPES) 2010, pp 653-668 (The Australasian Institute of Mining and Metallurgy: Melbourne).