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BHP confirms new investment on hold due to Queensland royalty tax regime

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World Coal,

According to the Queensland Resources Council (QRC), recent confirmation from Australia’s biggest mining company, BHP, that significant new investment in Queensland is on hold because of the State Government’s decision to lift coal royalty tax rates to the highest in the world is a massive blow.

In a quarterly operations review released to the ASX, BHP said:

“The Queensland Government’s decision to raise coal royalties to the highest maximum rate in the world makes Queensland uncompetitive and puts investment and jobs at risk. We see strong long-term demand from global steelmakers for Queensland’s high quality metallurgical coal, however in the absence of government policy that is both competitive and predictable, we are unable to make significant new investments in Queensland. This increase to royalties will impact the local businesses, suppliers and communities in Central Queensland where we operate.”

Ian Macfarlane, QRC Chief Executive, has called on the Queensland Government to urgently review its decision to suddenly increase coal royalty rates mid-last year, which overnight made the state’s coal producers less globally competitive and less attractive to investors:

“It’s a classic case of a government killing the golden goose in exchange for a short-term tax hit.

“You can’t over-tax an industry, let alone Queensland’s most important economic driver, and expect business to continue as usual.

“We know other mining companies are also reviewing their investment exposure in Queensland.”

Macfarlane said resources companies pull their weight economically and socially in Queensland, and have done for decades:

“Our mining and energy sector is the number one contributor to the state economy, number one regional employer and number one export industry.

“We support the jobs of 450 000-plus Queenslanders and 14 000-plus businesses, who all pay taxes to help fund doctors, nurses, teachers, and other government services.

“Last financial year, our industry contributed a record AUS$94.6 billion to the state economy, which included a record AUS$9 billion in royalties collected under the previous royalty tax regime.

“Unfortunately, this could all be about to change. Queensland’s coal royalty taxes are now completely out of step with the rest of the world, and even within Australia.

“Some of the world’s biggest mining companies, and this includes BHP, Glencore and Peabody, have now backed off or are rethinking their investment in new projects, as they reassess the stability of our local investment climate and the State Government’s attitude towards the resources sector.”

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