Following a 10-year absence of any changes in its royalty regime, on June 21 the Treasurer and Minister for Trade and Investment in Australia announced the decision of the Queensland authorities in Australia to increase its coal royalty, aiming to earn additional revenue from the exorbitant prices. The new scheme implies three tiers added to the royalty scheme which is currently capped at 15 percent for prices above A$150/mt.
Accordingly, from July 1 mining companies in Queensland will pay 20 percent royalty on prices exceeding A$175/mt, 30 percent over A$225/mt and 40 percent over A$300/mt. “Multinational coal companies have enjoyed an extraordinary period of stability in Queensland’s coal royalty regime, thanks to the Palaszczuk government’s extended freeze on coal royalties,” the Treasurer and Minister for Trade and Investment Cameron Dick stated. “However, with the freeze expiring on June 30, 2022, the existing rates do not account for the unprecedented windfall prices that coal producers are now receiving. It is noteworthy that the new tier will be applied exclusively to the margin, meaning that, if the coal price is A$302/mt, the 40 percent rate would apply to the A$2.
Coking coal suppliers in Australia and elsewhere may attempt to raise their prices. However, given the current market developments, namely the equilibrium between supply and demand amid still excessively high prices, the success of such a move remains doubtful, SteelOrbis assumes.