PERTH (miningweekly.com) – Mining giant BHP boss Mike Henry on Tuesday said that the Australian resources sector would benefit more from better productivity and fiscal settings, rather than subsidies in its bid to harness the critical minerals wave, warning that legislative changes in Queensland had put off future investment in the state.

Speaking at the World Mining Congress 2023, Henry said that the federal government’s recently-released Critical Minerals Strategy had faced some unwarranted criticism over a lack of subsidies.

“Trying to match the Inflation Reduction Act is a losing proposition. Australia is simply too small. What governments here, federal and state, should focus on are those things within their control to make investment fundamentally more attractive. Not simply due to the sugar hit of a subsidy. 

“There is enough investment appetite for good projects under the right conditions,” Henry said.

“What the Australian resources industry needs is better productivity and fiscal settings. Faster permitting. An industrial relations system that delivers productivity, flexibility and competitiveness to drive job creation and wage growth. Predictability and reduced risk. Under those conditions, the capital will flow.”

Henry told delegates that the Australian Critical Minerals Strategy recognised the importance of the opportunity ahead, which was made even more critical for Australia than some other nations given that the race was on in the country to replace those exports that would become challenged in a faster decarbonising world. 

“I wish I could say that all the settings are moving in the right direction, but unfortunately, for the nation, that is not the case.

“We’ve seen positive work from the Australian government in stabilising our relationship with China, and in recognising the importance of stability in the fuel tax regime by ruling out changes to the Fuel Tax Credit ahead of the last Budget, as well as increasing migration and access to skills.

“In South Australia, the government is working with the private sector as they seek to facilitate the development of the Northern Water Supply project, which has the potential to support a myriad of opportunities across the state in mining, agriculture and defence.

“And the Western Australian government recently announced an investment of A$40-million to support critical minerals exploration in that state, via their Sustainable Geoscience Investments package.

“But worryingly, some policies are taking us in the wrong direction and are going to make Australia less competitive: this includes recent and proposed changes to industrial relations legislation, particularly the Same Job Same Pay legislation and multi-employer bargaining.

"Capital is global. It will flow to where the risk/returns ratio is most attractive.

“Where governments act unpredictably and unreasonably, they increase risk for investment,” Henry said.

Speaking to the Queensland government’s decision to hike coal royalties last year, Henry said there was no industry engagement or effort made to understand the industry’s perspective.

“The near tripling of top-end royalties makes Queensland the highest coal taxing regime in the world. I repeat, the highest coal taxing regime for mining in the world.  

“In this case, both the outcome and the process have meant for BHP that we have opportunities to invest for better returns and lower risk elsewhere around the world, as well as here in Australian states like Western Australia and South Australia. And we will not be investing any further growth dollars in Queensland under the current conditions.

“Capital flow is the lifeblood of this sector and the settings to attract and facilitate capital are going to be the key determinant in whether we are collectively able to rise to the challenge and capitalise on the opportunity ahead,” Henry said.

“The challenge we face is massive, among the most ambitious and important we have faced as a global community for quite some time. Not only is the scale of the challenge massive, the pathway through that challenge is narrowing. To succeed, we need every variable working in our favour.

“No one actor can get there on their own. 

“There’s a window now for a collaborative and co-dependent effort. Where governments ensure policies, fiscal settings, approval frameworks, and trading arrangements attract the investments that the world needs to underpin the energy transition. Where the investor ecosystem supports companies and projects, applying a consistent and fair lens across the industry with a clear-eyed view of the vital role mining needs to play in a net zero global future. 

“And where the resources industry constantly seeks to raise standards and find better, more efficient, more sustainable and safer ways of delivering resources while truly partnering with communities and First Nations,” he added.