About 60 workers are likely to lose their jobs after Penrice announced plans to stop producing soda ash at its Osborne plant in Adelaide's north-west in June.
Penrice Soda is the only Australian producer of soda ash, also known as sodium carbonate, which is used to make glass, washing power, detergents, pharmaceuticals and as a food additive.
The company says the soda ash side of its business has become unprofitable because of increased energy and labour costs, the high Australian dollar and rising taxes, including the carbon tax.
It has formed a joint venture with SASS Victoria to sell imported soda ash.
Chief executive Guy Roberts says lower international shipping costs have made imports much cheaper, driving down demand for locally produced soda ash.
"The glass industry in particular has seen reduced demand for bottles in Australia and reduced demand for glass windows in Australia," he said.
"In South Australia in particular, increasing costs and taxes have combined over the last four or five years to give the board serious cause for concern.
"We have made attempts to divest the business, and we haven't received any offers sufficiently attractive to warrant accepting them." Mr Roberts says the introduction of the carbon tax played a role in the decision.
"If I describe the carbon tax as the icing on the cake, that'd be about how I feel at the moment," he said.
"It is not the reason that we're closing this plant, as we can all observe, there are a lot of factors at play here, but the carbon tax, on top of all these other factors, is very difficult to manage." Mr Roberts says the the closure will have some benefits for the environment.
"Once we turn off the soda ash plant the production of calsilt will cease, as will the very expensive calsilt recovery operation," he said.
"We will also cease the requirement for ammonia and we would cease discharging ammonia into the air and into the Port River." The company says there will be less demand for limestone from the company's mine at Angaston in the Barossa Valley but says no job losses at that site are forecast.
It says its other operations, including sodium carbonate production and a new selective salts recovery technology for the coal seam gas industry, remain profitable.
The Osborne plant will continue to produce quicklime for use in cement.