PERTH (miningweekly.com) – Diversified major BHP Billiton has lodged an application with the Queensland Supreme Court over a A$288-million royalty bill from the Queensland Office of State Revenue (OSR) over the major’s share in the BHP Billiton Mitsubishi Alliance (BMA) coal joint venture (JV).

The OSR issued BHP with a reassessment totalling A$186-million in royalties and a further A$102-million in interest, relating to the period between July 2005 and December 2012.

BHP said on Thursday that, during this time, the company had paid some A$2.4-billion in royalties to the Queensland government for its share in the BMA JV.

The dispute now lodged before the Supreme Court related to the proper basis for calculating the value of coal for royalty purposes under Queensland law, with BHP saying that its royalties were calculated based on the product’s first sale, which was to BHP’s own marketing hub based in Singapore.

The OSR, however, contended that royalties should be calculated by reference to the price at which BHP’s marketing hub sold the coal to its customers.

“This dispute relates to the application of Queensland royalty laws to our value chain. BHP has initiated court proceedings to appeal the reassessments,” BHP head of group tax Jane Michie said.

“We believe the OSR is seeking to reassess royalty amounts based on retrospective laws, as well as levy interest in excess of market rates on the disputed amounts.”

Michie said on Thursday that BHP was committed to its marketing model, adding that the Singapore hub played an important role in the company’s value chain from exploration to end-user.

“This includes developing the company-wide view of markets, guiding potential future growth products, developing strong integrated relationships with our customers and, ultimately, selling our products for the best prices.”

This was not the first time that the miner’s marketing hub had gained attention.

In April, the Australian Taxation Office (ATO) investigated majors BHP Billiton and Rio Tinto for allegedly channelling billions in profits from the sale of Australian iron-ore through their Singapore marketing companies.
The ATO estimated that the companies saved more than A$750-million a year in taxes.