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PERTH (miningweekly.com) – Queensland Treasurer Cameron Dick has escalated the fight with diversified major BHP, warning that the miner’s current leases at its Queensland mines could be cancelled, if they were being ‘misused’.
BHP on Tuesday again said that given the negative impact on investment economics of the Queensland government’s decision to raise coal royalty rates and the "increase in sovereign risk" as a result of this decision, the miner would not be investing in any further growth in Queensland, however, BHP said that it would sustain and optimise its existing operations.
Under Queensland legislation, the Resources Minister could cancel a mining lease or impose a penalty if a mining lease holder has carried out activities that are not bona fide for the purpose of which the lease was granted, has failed to pay royalties or monies payable under the lease, or has failed to comply with the conditions set under the mining lease.
A spokesperson for the Treasurer told Mining Weekly Online on Tuesday that any decision by the Minister for Resources would be made in accordance with the legislation.
BHP reported coal production of 29-million tonnes from its BMA operations in Queensland during the 2023 financial year, on par with the 2022 financial year, while its underlying earnings before interest, taxes, depreciation and amortisation dropped by 50% over the same period, to $3.2-billion, on the back of lower commodity prices and higher royalties.
“The introduction of the new royalty regime resulted in an additional $0.7-billion in royalties paid to the Queensland government by BHP in relation to FY23. Combined with income taxes, this equates to an adjusted effective tax rate including royalties of 55%,” the miner said in its results.
During the 2024 financial year, the miner would rebuild inventories at BMA mines, which had been drawn down over the past three years to balance the supply chain and maximise value amid significant weather disruptions.
The miner also said that it would continue to progress its planned process to divest the Blackwater and Daunia mines for value.
The Queensland Resources Council (QRC) said on Tuesday that investor confidence in the state would be further shaken by Dick’s threats to revoke the coal mining leases.
“Today’s comments by the Treasurer will further erode investor confidence in Queensland,” QRC CEO Ian Macfarlane said.
“Mining companies operate in Queensland to the highest standards and make valuable contributions to our economy. We shouldn’t take for granted that Queensland will always have a strong resources sector to rely on if policies are introduced which make us less competitive and less attractive to investors.
“All Queenslanders will lose out if resources companies move their focus to mining projects in other states and countries because of growing uncertainty about the Queensland Government’s attitude towards the mining sector.”
Macfarlane said resources companies take 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.”