"This puts us at more of a disadvantage than we were at without the scheme," the council's executive director, Miles Prosser, told Reuters.
"It is now difficult to envisage major expansion in Australia and this will certainly put a number of operations in Australia under severe pressure," Prosser said.
Australia's parliament on Tuesday said it will impose a A$23/t tax on carbon emissions for 500 of the largest polluters across mining, energy, heavy manufacturing and transportation from mid-2012.
Electricity comprises 30% of aluminum smelting costs. Producers, which include Alcoa and Rio Tinto, argued against implementing a scheme at this time, saying the cost hikes would leave them struggling to compete internationally.
The legislation imposes a carbon cost on Australian aluminum producers of at least $60/t of aluminum compared to only $8/t in China, according to Prosser.
Australia's carbon cost will rise every year of the scheme and over the next decade to more than $200/t of aluminum while in China it is not expected to get any higher than $60/t, he said.