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Coal royalty hike to claim jobs - QRC survey

Image shows QRC CEO Ian Macfarlane

QRC CEO Ian Macfarlane

31st August 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Queensland miners are preparing to cut staff numbers following the state government’s increase in coal royalties, the Queensland Resources Council’s (QRC’s) state of the sector report for the June quarter states.

The survey found that more than one-quarter, or 27%, of resources leaders expect to employ fewer people at existing operations over the next five years as a direct result of the state government’s royalty hike.

This compares to the same survey six months ago, which found no Queensland CEOs expected to cut jobs over the next 12 months and 35% were feeling confident about increasing employment at their operations.

QRC CEO Ian Macfarlane said the report confirms the industry’s worst fears about the impact of the government’s higher royalty taxes on future investment plans.

“This latest data shows the state government’s extra royalty tiers have dramatically impacted business confidence and investment plans across all commodities, not just coal projects,” he said.

“The report is a major red flag because it shows how much the royalty hike has hurt Queensland coal projects as well as gas, base metals and critical minerals projects.

“Most resources companies don’t just focus on just one commodity, so hitting the coal sector with higher taxes has had a scattergun effect across our industry and forced a rethink of investment plans.

“Nearly one-third, or 31%, of non-coal CEOs now expect to cut jobs at their existing operations over the next five years, as companies look to invest capital in less-risky destinations.

“This is a very sobering outlook for Queensland at a time people are already feeling under pressure from rising costs of living and higher interest rates. The last thing people need to deal with is a downturn in the resources sector, which will impact every Queenslander in one way or another.”

Macfarlane said resources companies with established operations in Queensland were unable to relocate them, but that new projects or planned expansions of existing sites would be hit hard as companies consider investing in less highly taxed destinations.   

The QRC’s latest report found more than half, or 54%, of CEOs believe the likelihood of expanding or upgrading their existing operations has decreased because of the royalty hike.

More than half, or 62%, said the likelihood of new projects had also fallen, with 38% saying the chance of undertaking new projects had dropped by more than 25%.

“This is a big hit to industry investment plans for a state government that's constantly talking up an expanded new economy minerals sector, and to Australia’s future energy and resources security,” Macfarlane said.

He added that the state government’s coal royalty hike could cost the sector far more than the A$5.5-billion projected by the Queensland Treasury for 2022/23.

Using the latest forecast coal prices from independent analysts, the QRC notes that coal royalties will reach A$12.1-billion in 2022/23, with A$4.4-billion generated from the new royalty tiers.

QRC modelling based on earlier coal price forecasts from the Office of the Chief Economist, predicted coal royalties would reach A$16.1-billion this financial year, with A$6.7-billion generated from the new tiers.

Macfarlane said the impact of Queensland’s now uncertain resources investment environment is already being felt, with Australia’s largest mining company BHP announcing it will pause investment plans in Queensland owing to the sudden increase in state royalty taxes.

“And this is unlikely to be the last project to be affected. It’s a very difficult situation for our sector, when only four months ago we were being thanked by the state government for playing a key role in Queensland's economic recovery from Covid-19.”

A CEO sentiment survey found the top three concerns for resources CEOs included the global macroeconomy, high input costs, and attracting and retaining skilled employees.

Edited by Creamer Media Reporter

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