Treasurer’s threat inflames coal royalties row

BHP chief executive Mike Henry has described the company’s position on investment in Queensland as uncontroversial in the face of threats by Treasurer Cameron Dick to revoke mining leases. The company’s annual report this week repeated its stand that given the State Government’s decision to raise coal royalty rates and the resulting increase in sovereign risk, BHP would not be investing in any further growth in Queensland. Mr Dick this week warned of the government’s “clear expectation” that BHP continue to invest in its current projects. He told The Australian that the government would not hesitate to revoke existing tenures on BHP’s seven Queensland mines if they were being “misused”. Questioned on Mr Dick’s attack, Mr Henry said: “I don't think we've said anything particularly controversial to be honest, because in essence, what we're saying is if returns go down and risk goes up, of course that makes investments elsewhere, in relative terms, more attractive. “I think you'd find any business or frankly any of us in our personal finances would look at it in exactly the same way. So I think our position is relatively uncontroversial.” BHP has stated it will sustain and optimise its existing coal mines in the state, and Mr Henry noted that the BHP Mitsubishi Alliance (BMA) was investing more than $1 billion a year in keeping these operations going. The introduction of the new royalty regime resulted in BHP paying an additional US$0.7 bn – about $1.089 billion - to the State Government for FY23, meaning the amount was more than $2 billion for BMA operations in total as Mitsubishi also pays half. The Queensland Resources Council said investor confidence in the state’s resources sector would be further shaken by Mr Dick's ‘extraordinary threat’ to revoke coal mining leases. Chief executive Ian Macfarlane said resources companies took a long-term view on where to invest in new projects because of the scale of capital required and length of time involved. “Any sudden and extreme change in government policy, like we saw in Queensland last year, acts as a major deterrent to future investment,” he said. “We know other companies are also reviewing their investment and employment plans because of the new royalty regime. “Once that tide of investment starts to move away from Queensland, it will be very, very difficult to turn it back. This will cost thousands of future jobs and business opportunities and threatens Queensland’s economic security.” Mr Henry highlighted the strong growth in demand for higher quality hard coking coal for a global steel industry looking to decarbonise. “… Queensland has the best of that, and so there is growth potential in Queensland coking coal," he said. "The challenge for us in the business is attractiveness relative to opportunities in other jurisdictions. But again, I don't think this is a particularly controversial position to hold.”

Treasurer’s threat inflames coal royalties row

Industry Queensland

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