Two events in the UK this week stand out as examples of what happens when a country makes a mess of its mining and energy taxes. And while it is never easy to make comparisons it is possible to be concerned that where Britain goes today, Australia will follow.

The first development in Britain was a report from the Centre for Policy Studies, a right-wing think tank, which forecast the closure of what remains of UK coal mining with the resulting loss of 6000 jobs, grim news for a country which has just hit a 20-year unemployment high of one million people out of work.

The second British mining and energy related development was an announcement from Rio Tinto that it plans to close its Lynemouth aluminium smelter with the loss of at least 515 jobs, and possibly another 111 working at the smelter’s coal-fired power station.

In both cases the cause of the closures is government policy. The last of the coal mines, according to the CPS, will go thanks to a plan to raise the cost of using fossil fuels with the planned introduction of a carbon emissions floor price – exactly what Australia has just done.

There are big differences between Australian and British coal, especially in terms of quality and the size of the mines. British coal tends to come from small underground mines and has struggled to compete with imported material for decades. Its main reason for survival is proximity to a market – from the coal mouth directly into the adjoining power station.

But, according to the CPS, it will not be competition which finally kills British coal. It will be the tax hit planned by the move to a carbon pricing scheme.

Rio Tinto is citing largely the same reason of rising power costs caused by government policies for axing its 40-year-old Lynemouth aluminium smelter and the proposed sale of the adjoining power station.

Rio Tinto Alcan chief executive Jacynthe Cote said it was clear the smelter was no longer a sustainable business “because its energy costs are increasing significantly, due largely to emerging legislation”. She added that the power station might remain open under new ownership.

In Australia, the tax problems of British coal mining and aluminium production might seem remote. After all, investors, mainly foreign, continue to pour money into Australian coal, as Peabody’s acquisition of Macarthur demonstrates, and as Chinese and Indian companies have confirmed.

But this is where the future of Australian coal gets interesting because it seems to The Hog that foreigners are more enthusiastic than locals when it comes to investing in coal. Why is that?

What is it that foreign investors see in Australian coal and are prepared to pay high prices to enter the industry, just as the locals sell out?

Time will answer that question, though it seems the foreign investors are marching to a different beat. They are prepared to invest in Australia, pay whatever taxes are demanded, and haul the coal to international markets where energy demand is strongest and even heavily-taxed coal can be sold at a profit.

Australians, on the other hand, reckon that now is a good time to catch a high price and leave an industry before the government tax hit becomes unbearable – as it has become in Britain.

Boiled down, someone is right, and someone is wrong, particularly when it comes to coal valuations and the creeping effect of the carbon and mining taxes.

What’s happening in Australian coal today has a similar ring to what happened in the sell-off of Australian power stations and pipelines some 20 years ago.

Back then, foreign investors rushed to buy assets such as Victorian power stations and pipelines in WA – only to discover the local rules were much tougher than they imagined, leading to massive losses when some of them were forced by their bankers to sell.

Perhaps the foreign investors will get a better result from their plunge into the Australian coal industry thanks its focus on exports to Asia.

But as more of the industry falls into foreign hands, it could produce an interesting reaction in Canberra with the Australian government potentially emboldened to ratchet up the tax take from coal because it can argue that it’s not directly hitting Australians, it’s a tax on foreign investors.

It remains to be seen whether the Australian government will decide to go the way of ever-increasing taxes. Though for a glimpse of what happens when the tax-attack on fossil fuels goes too far, take a look at shrinking Britain where coal mining is fast fading (again) and industries which rely on coal-fired power are closing their doors because of rising taxes.