BHP, Australia’s largest coal producer, has decided to pause its investment plans in Queensland due to the sudden coal royalty tax hike and China’s ongoing import restrictions on Australian coal. The company expects this further cost pressure to discourage investment, operational growth, job creation and local business spending across the state.
According to Queensland Resources Council (QRC) Chief Executive Ian Macfarlane, the Queensland Government appears to be “flying blind about the impact of excessive new coal royalty taxes on Queensland jobs and business opportunities”. Meanwhile, stating that the government has harmed Queensland’s international reputation as a safe place to invest in resource projects and more coal companies will have to put a hold on investments.
QRC said companies have paid as much in state royalties in the first six weeks of the new tax regime as the Treasurer said it would cost the industry over the year.
Mr Macfarlane said although coal has been achieving record prices in the past 12 months, anyone who understands export markets knows prices constantly fluctuate, depending on what’s happening globally.
“Just like the beef and grain industries, resources companies rely on using the extra money earned in the good times, to help ride out the lows when prices fall,” he said.
“As anyone who lives in a resources region knows, when our sector is doing well, companies are upgrading their machinery and equipment, expanding operations, employing more people, investing in new technologies and contributing more to their local communities.
“This royalty hike is going to hurt a lot more people than the Government seems to realise. Mine projects are already being put on hold, and there will be more. The Government is shutting down a pipeline of investment opportunities in Queensland for the next 20 to 30 years.”
“This decision to halt investment in Queensland for the foreseeable future and reassess its plans for the business going forward is typical of what we warned the Queensland Treasurer would happen since he unilaterally decided to add three new tax tiers to the coal royalty system in the May budget,” he said.
“This is not an isolated case – coal companies, large and small, are saying to us they’re going to have to put a hold on investments for now and see what happens with the State Government around royalties.”
“A strong resources sector requires investor confidence. The State Government’s huge royalty increase, without consultation, is a red flag to investors in all commodities, with long-term consequences for the Queensland economy.”
The Queensland Government announced a new coal royalty regime in the 2022/23 budget in June. Previously, royalties were capped at 15 per cent for prices above $150 a tonne.
From July, new tiers were introduced; 20 per cent for prices above $175 a tonne, 30 per cent for prices above $225 a tonne and 40 per cent for prices above $300 a tonne.
The QRC compiled the following statements from various companies in response to the royalty hikes:
BHP President Minerals Australia Edgar Basto
“We are deeply concerned about the negative impact this new tax will have on production, jobs and the communities of Central Queensland. The cost of doing business in Queensland is already high, and further cost pressures will discourage investment, operational growth, job creation and local business spending across the state.”
Coronado Global Resources
“We continue to pay our share of royalties, corporate tax, payroll tax, land tax, tenement rentals, and financial provisioning scheme deposits. Companies will always consider investment decisions on a case-by-case basis, and the imposition of additional royalties on Queensland business puts it at a competitive disadvantage to lower cost jurisdictions within Australia and overseas.”
Bowen Coking Coal executive chairman Nick Jorss
“This tax grab will permanently bake in Queensland as the regime with the highest royalties in the world, ostensibly to solve a near-term Government funding issue. This raises substantial risks to further investment in Queensland mining and regional Queensland jobs. I believe it is important that the Government now sits down with the industry to try and find a workable and equitable solution.”
Bravus Mining and Resources
“This latest Queensland Government cash grab from the resources sector not only threatens the livelihoods of hard-working regional Queenslanders, but also the future and prosperity of communities like Townsville, Rockhampton, Clermont, Moranbah, Emerald and Mackay. It beggars belief that once again regional Queenslanders are being fleeced to plug Labor’s budget black hole in Brisbane.”
Anglo American acting CEO of Anglo American in Australia, Nick Barlow
“Queensland’s coal royalty rates were already amongst the highest in the world. This new tax is inconceivable, and it will place a heavy burden on our sector and Queensland mining regions. Our steelmaking coal business in Australia competes for capital against other options within our global diversified mining portfolio, and the new extraordinary progressive tax tiers will hurt the business case for new investment.”