BHP has announced it will ‘reconsider’ its coal investments in Queensland, following an increase to the State Government’s coal royalties announced in June.
Previously capped at 15 per cent for prices above $150/t new royalty tiers were introduced in June charging 20 per cent for prices above $175/t, 30 per cent for prices above $225/t and 40 per cent for those above $300/t.
BHP claims the decision was made without consultation with industry, and will now reassess its investments in the state, including the proposed Blackwater South coal mine in Central Queensland.
BHP Chief Financial Officer, David Lamont, said the ‘snap’ decision was disappointing to the company in comments made following the release of the company’s financial results.
“There is a degree of respect shown by the government for industry, a real willingness to engage, understand, and try to come to an aligned view,” Mr Lamont said.
“From an investor perspective, of course that gives you a greater degree of confidence, then, about the process and how fiscal terms will play out over time.
“In the case of Queensland, it is pretty hard to be confident in that now, given a snap decision was taken and just implemented.”
Queensland Resources Council Chief Executive, Ian McFarlane, claimed the royalty increase harmed both the sector and the state’s international reputation.
“BHP’s 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,” Mr McFarlane said.
“BHP however 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.”
Mr Macfarlane said there was no need for the government to impose a so-called ‘super tax’ on coal because Queenslanders were already benefiting from higher coal prices under the previous royalty regime.
“Under the previous system, last year Queensland coal companies paid more than $7 billion in royalty taxes – which is four times as much in royalty taxes compared to the previous year,” he said.
“As commodity prices go up, so do royalties – that’s how the system worked.
“Unfortunately, the State Government has now lifted rates to unprecedented levels, without consulting our industry and the consequences of that decision are now being laid bare for all to see.
“The State Government has effectively killed Queensland’s golden goose – the resources sector – and put at risk the economic and employment future of Queensland.”
