The mining tax, carbon reduction legislation and electricity prices have led to the scrapping of billions of dollars worth of aluminium smelter upgrades in the New South Wales Hunter Valley.
The ABC has been told Norwegian company Hydro has shelved its $4 billion Kurri Kurri smelter upgrade, while plans for Tomago Aluminium's proposed $600 million potline have also been scrapped.
Escalating electricity prices are the biggest concern along with the mining tax, carbon reduction legislation and renewable energy targets.
The projects could have created up to 20,000 new jobs.
Hunter Business Chamber CEO Peter Shinnick says it is disastrous.
"They're going to maintain their current plant but eventually they will close," he said.
"This is tragic news for the Hunter."
The Australian Aluminium Council's Executive Director, Miles Prosser is worried future investment will be forced offshore.
"Imposing costs on Australian producers that aren't imposed on producers elsewhere in the world basically puts us at a disadvantage and that potentially compromises future investment," he said.
Mr Prosser says exemptions are needed to ensure the aluminium sector survives.