⛽ What's happening? Australians will refund the 15 largest mining companies more than $2.2 billion in diesel tax this year. Now, a non-profit is proposing a cap to the rebate, saying it will incentivise mining operators to reduce pollution and get on with electrification.
💸The scheme: The Fuel Tax Credit Scheme refunds businesses on tax they pay for fuel used in vehicles or machinery that never touch public roads. This includes mining trucks, farming machinery and construction vehicles.
In 2025-26, this tax is estimated to cost Australians $10.8 billion. Forty-seven percent of that is taken up by mining.
🎯The proposal: The non-profit Energy Futures Foundation wants the refund capped at $50 million per corporate group.
Executive Director Bruce Hardy said the $50 million cap would ensure no agricultural or small business operator is impacted, while capturing the 15 largest mining claimants who each receive more than that each year.
It’s estimated this $50 million cap would save the taxpayer $2.2 billion a year, as the money would not be returned to the mining companies.
⚖️The industry argument: Mining groups say stripping the credits would damage Australia's international competitiveness. Hardy doesn't buy it.
"Australia's competitiveness on the global front for iron ore is not driven by the $2 billion that the government is spending on subsidising diesel," he told the National Account.
🔋Already happening: Hardy pointed to Fortescue, one of the world's largest iron ore producers, as a sign large-scale electrification works.
"Fortescue is showing that you can electrify entire mining site operations if you set that goal," he said.
The corporate giant has set aside $8.8 billion for electrification of its mining operations in the Pilbara region of Western Australia.
🤔Self-interest? Fortescue has been a vocal advocate for capping the rebate and is running an ad campaign across the country.
The industry is split on whether this move to cap the rebate is genuine advocacy to move big mining towards zero-emissions operations, or a competitive play.
Chamber of Minerals and Energy chief Aaron Morey wrote in the AFR the push amounts to "a major new production tax on Australian exports for zero environmental gain."
Fortescue CEO Dino Otranto isn't backing down, saying the pushback is no surprise: "they are receiving free money."
🏛️The Politics: A campaign from within the Labor Party, the Labor Environment Action Network (LEAN), is also advocating for the $50 million cap .
The campaign has received support from hundreds of local Labor branches in Australia, and MP Jerome Laxale, a patron of LEAN, will be among those arguing its case at the ALP National Conference in July.
Laxale told the North Shore Lorikeet he has faith in the “democratic process” of the National Labor Conference.
“It's cheaper for these large mining companies to keep on using diesel and buying carbon offsets instead of electrifying. I think that's a distortion, and we need to address it,” he said.
☀️The bigger picture: Hardy believes getting big mining off diesel is one of energy security as much as cost.
"You can close the Strait of Hormuz, but it's really difficult to stop the sun shining in Australia," he said.
💰Where would the money go? Hardy said the recouped revenue could fund electrification support for smaller mining operations, pay down government debt, or go toward cost-of-living relief.
Watch the National Account’s Archie Milligan below:
Credit: Moodboard