A quarter of Qld coal produced in the red - QRC
PERTH (miningweekly.com) – The Queensland Resources Council (QRC) on Friday revealed that nearly 25% of the coal produced in Queensland was being done so at a loss.
In a submission to the state government, ahead of the budget, QRC noted that this loss occurred despite vigorous cost cutting across the industry.
“Some of these mines are only staying open because production is a more palatable option than closing operations locked into transport costs levied on a take or pay basis,” said QRC CEO Michael Roche.
“However, with one out of every 10 t of coal currently produced in Queensland in the red to the tune of more than A$14, some mines are at extreme risk of shutdown.”
Roche warned that if this were to happen, Queensland could lose up to A$1.8-billion in spending and more than 22 000 jobs.
The QRC submission said that from a public interest perspective, increasing state-based taxes such as royalties was the least desirable option for the state government to return its budget to surplus and retire debt.
“Queensland’s metals, bauxite and gas producers are also at the wrong end of their respective global cost curves and in no shape to absorb a further royalty hit,” Roche said.
“Given the government’s need for significant and prompt revenue flows to stabilise debt levels and lower state borrowing costs, the QRC supports the government’s proposal for selected sale or leasing of assets, subject to appropriate regulatory and commercial safeguards being discussed with industry and implemented prior to divestment.”
He added that in order for the state government to achieve structural improvements in its finances, there was a need for higher revenue flows.
“Government reforms targeted at lowering costs, improving productivity and encouraging new investment in the resources sector will lead to stronger flows of sector royalties to the state,” Roche said.
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