Queensland’s coal royalty hike could have implications beyond the coal industry, striking Japanese investment in areas such as hydrogen joint ventures, Japanese ambassador Shingo Yamagami warns.

“Indeed, the Queensland government’s announcement sent shockwaves through Tokyo, causing a drop in the stock price of one of the major Japanese trading companies,” he said.

Speaking at a Minerals Week event in Canberra, Mr Yamagami said he stood by previous comments that the royalty hike had affected the trust that Australia has built up with Japanese investors.

“Japanese companies do not see Australia as a house, but as a home. This is why decisions like the Queensland government’s coal royalty hike carry so much potential risk,” he said.

Mr Yamagami said he met with Premier Annastacia Palaszczuk last month and encouraged the Queensland Government to engage in consultation with Japanese companies in the state.

“And not long after, State Treasurer Cameron Dick conducted a face-to-face meeting with Japanese businesses,” he said.

“While this is a step in the right direction, a lot remains to be done. Japan will continue to follow this issue closely.”

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Ten per cent of Australia’s total exports are goods to Japan, with minerals and gas making up the lion’s share, and Japan is the second largest source of foreign direct investment in Australia.

Mr Yamagami highlighted the role of Australian gas in powering Japanese industry and keeping homes warm.

Japan was watching carefully the consultation underway in Australia in response to the prediction of gas shortage in the south-eastern part of the country next year, he said.

“I recently had a very good discussion with Trade Minister Don Farrell and Resources Minister Madeleine King on this issue and made the point that Japan does not want the flow of LNG from Australia to Japan to be impacted negatively,” he said.

“I was glad to hear both ministers’ reassurances that Australia will remain a trusted and reliable energy exporter to Japan.”

Japan was Australia’s No. 1 destination for LNG export last year, exporting a record 26.7 million tonnes.

Diversification of rare earth supply chains was an area where Japan and Australia had a proven track record, he said.

“We successfully worked together to develop alternative supply chains of rare earths when faced with a de-facto Chinese export bans on rare earths in 2010 thanks to co-operation from Lynas,” Mr Yamagami said.

“And we are committed to building upon this achievement to further diversify and strengthen our supply chains going forward.”

Looking to the future, emissions reduction would be a major driver of Japan- Australia cooperation, especially when it came to resources,” Mr Yamagami said.

“Hydrogen and ammonia pilot projects are an area where economic collaboration between our countries are leading the world,” he said.

“In June last year, Japan and Australia signed the “Partnership on Decarbonization through Technology,” marking the beginning of Japan-Australia hydrogen co-operation.

“Earlier this year, as part of the Hydrogen Energy Supply Chain Project, or HESC, the world’s first liquefied hydrogen carrier, manufactured by Kawasaki Heavy Industry, successfully transported hydrogen 9000km from Victoria all the way to Kobe, Japan.”