BHP Mitsubishi Alliance (BMA) has reported a challenging first half for the 2026 financial year, with a key executive warning of the ‘real headwind’ created by Queensland’s royalties regime.

Underlying earnings fell 34 per cent despite the metallurgical coal business maintaining solid production volumes from its Central Queensland operations, while the underlying return on capital employed was listed as 0 per cent.

While this was partly down to lower coal prices, BHP chief financial officer Vandita Pant said Queensland’s royalty regime was equally to blame.

The amount the business was paying in taxes and royalties was many times higher than the profits generated, Ms Pant said.

“And that remains a real headwind and a challenge in spite of good work that our team is continuing to do there…,” she said.

“Longer term, the demand, the dynamics of met coal of high quality remain positive. However, from a business operational return perspective, the challenges are acute.”

The group has taken action to reduce costs in response to what it described as the ‘material impact of the Queensland Government’s coal royalties on business returns.’

BMA placed its Saraji South operation into care and maintenance late last year and has removed about 750 roles across Queensland.

State offers certainty, no royalty change

Queensland Treasurer David Janetzki ruled out any change to the coal royalties system, saying the LNP had been clear about its position since before the State election.

“We’ll never demonise the coal industry like the former Labor government did … ,” he said.

“We’ve delivered a stable taxation environment, streamlined approvals and regulatory processes, and a commitment that coal will be part of the energy system for longer.

Related: Bravus announces major Carmichael expansion plans

“My first budget last year delivered a no new or increased taxes outcome. We have been clear about our support for the industry, what it means for regional Queensland, and we’ve delivered a stable environment, and that’s what we’ll continue to back in, because jobs in regional Queensland are vitally important.

“Coal royalties play a vital role in paying for hospitals, roads, dams, bridges, nurses, teachers, doctors. It’s an important role that it plays. We’ve offered that certainty and stability to the industry, and we’ll continue to do so.”

Group maintains production guidance

Average capital employed at BMA operations for the half-year was about $US6.5 billion and annualised profit after taxation (excluding net finance costs and exceptional items) was $US22 million.

BMA posted underlying EBITDA of $US0.3 billion for the half year ended December 31, down from $US0.4 billion in the prior corresponding period.

Lower average realised prices for steelmaking coal impacted earnings by $US115 million (net of price-linked royalties).

BMA achieved a 2 per cent increase in steelmaking coal production, underpinned by the highest first half of stripping volumes in five years, with a 12 per cent increase in waste removal activities.

‘This increases access to coal in the short term and enables stabilised strip ratios and inventory levels in the medium to long-term,’ the company said in its results announcement.

Looking ahead, BMA mines are maintaining their full-year production guidance of 36 to 40 million tonnes.

Focus on higher-quality coal

Despite near-term challenges, BHP highlighted the importance of high-quality steelmaking coal in the global energy transition.

The company noted that premium hard coking coal products produced by BMA would be valued for their role in reducing greenhouse gas emission intensity in blast furnaces.

‘Over the last few years, we have strategically refined our coal portfolio to focus on higher-quality steelmaking coal and BMA remains one of the largest suppliers of this higher-quality coal in the seaborne market,’ the company stated.

BHP’s medium-term targets for BMA are to increase production to between 43 and 45 Mtpa tonnes per annum by the end of the decade, while reducing unit costs to below $US110 per tonne.

The company said it was focused on rebuilding raw coal inventory levels into 2027 and normalising strip ratios, while further improving labour and fleet productivity.

You may also like: