Australian mining company BHP Billiton has decided to pause its investment plans in Queensland due to the sudden increase in coal royalty rates and China’s ongoing import restrictions on Australian coal.
The company stated that it could not provide sustained capital expenditure guidance for the 2023 financial year for its metallurgical coal joint venture BHP Mitsubishi Alliance (BMA), and will assess the impact of new royalty rates on BMA economic reserves and mine lives, as well as the impact on production and jobs in Queensland. BHP also stated that the end of operations at the BMA sites could be earlier than previously anticipated, considering its long-term outlook for metallurgical coal commodity prices.
The company expects this further cost pressure to discourage investment, operational growth, job creation and local business spending across the state.
Meanwhile, stating that the government has harmed Queensland’s international reputation as a safe place to invest in resource projects, Ian Macfarlane, chief executive of Queensland Resources Council, said that the more coal companies will have to put a hold on investments.
Australia’s Treasurer and Minister for Trade and Investment announced the decision of the Queensland authorities to increase its coal royalty, aiming to earn additional revenue from the exorbitant prices, with mining companies in Queensland having to pay 20 percent royalty on prices exceeding A$175/mt, 30 percent over A$225/mt and 40 percent over A$300/mt from July 1, as SteelOrbis previously reported. Previously, royalties were capped at 15 percent for prices above A$150/mt.