Chemicals company Penrice is to stop soda ash production in Adelaide with the loss of up to 60 jobs.
The company said on Friday the decision had been forced by increasingly difficult trading conditions, including the introduction of the federal government's carbon tax.
It said in the face of a high Australian dollar, increased taxation and increasing energy and labour costs, imported soda ash continued to be 40 per cent cheaper.
"Penrice does not see any significant change to these factors occurring in the foreseeable future," the company said in a statement on Friday.
"The uncertainty associated with these factors, such as whether some are more structural than cyclical, has led the company to decide to import soda ash rather than manufacture it."
Soda ash production will stop in June this year, but the company will continue to produce sodium bicarbonate.
Penrice said the loss of jobs was regrettable and it would consult with employees to explore all options including potential redeployment and redundancy payments.
South Australian Liberal Senator Simon Birmingham said the loss of Australia's only soda ash production facility was another blow to local manufacturing.
"Penrice has specifically highlighted the carbon tax and the increased costs it has imposed as a direct cause of this closure," Senator Birmingham said.
"The carbon tax is proving to be a dead weight around the neck of local manufacturers who are already struggling with a high Australian dollar, high production costs and cheap imports."