BHP has announced it will put its new Queensland investment on hold following the Queensland Government’s decision to raise coal royalty tax rates to the highest in the world, the Queensland Resources Council (QRC) reported.
BHP stated in a quarterly operations assessment submitted to the ASX that: “The Queensland Government’s decision to raise coal royalties to the highest maximum rate in the world makes Queensland uncompetitive and puts investment and jobs at risk. We see strong long-term demand from global steelmakers for Queensland’s high-quality metallurgical coal, however in the absence of government policy that is both competitive and predictable, we are unable to make significant new investments in Queensland. This increase to royalties will impact the local businesses, suppliers and communities in Central Queensland where we operate.”
QRC Chief Executive Ian Macfarlane urged the State Government to reconsider its decision to abruptly raise coal royalty rates in the middle of last year, which rendered the State’s coal producers less globally competitive and less appealing to investors.
“It’s a classic case of a government killing the golden goose in exchange for a short-term tax hit. You can’t over-tax an industry, let alone Queensland’s most important economic driver, and expect business to continue as usual,” Macfarlane said.
Macfarlane stated other mining companies are evaluating their Queensland investment exposure as well.
According to Macfarlane, Queensland’s resources companies have contributed significantly to the State’s economy and social fabric for many years.
“Our mining and energy sector is the number one contributor to the state economy, number one regional employer and number one export industry. We support the jobs of 450,000-plus Queenslanders and 14,000-plus businesses, who all pay taxes to help fund doctors, nurses, teachers and other government services,” he added.
Macfarlane said that in the most recent fiscal year, the Queensland resources industry’s contribution to the State’s economy was a record $94.6 billion, which included a record $9 billion in royalties collected under the former system of royalty taxes.
“Unfortunately, this could all be about to change, Queensland’s coal royalty taxes are now completely out of step with the rest of the world, and even within Australia,” Macfarlane stated.
He added, “Some of the world’s biggest mining companies, and this includes BHP, Glencore and Peabody, have now backed off or are rethinking their investment in new projects, as they reassess the stability of our local investment climate and the State Government’s attitude towards the resources sector.”
Macfarlane stated that it was disappointing that Treasurer Cameron Dick for asserting in the media that “coal royalties are worth fighting for.”
“Queensland’s resources sector is made up of Queenslanders, working and earning a living to support their families, so this is an odd statement for a treasurer to make,” he said.
Furthermore, he highlighted the need for the State Government to work with the sector concerning coal royalties.
