Queensland’s premier has come out swinging in the latest round of a heavyweight bout with the mining sector over coal royalties.
An expert has also weighed in, saying other factors are landing more telling blows on the Sunshine State’s miners rather than royalties.
Premier David Crisafulli on Tuesday appeared to take aim at BHP Mitsubishi Alliance and the like in his first State of the State address in Brisbane, following a string of mining job losses.
The joint venture company had highlighted the government’s “unsustainable” scheme when it cut 750 jobs last week, claiming the state coal industry was reaching “crisis point”.
Fellow giant Anglo American and Queensland company QCoal soon followed in what was labelled a co-ordinated campaign resulting in more than 1200 workers facing the axe.
It prompted calls for reform but the premier on Tuesday was adamant his Liberal National government would not tweak the state’s royalties scheme, which he had promised not to touch during his 2024 election campaign.
Mr Crisafulli appeared to take a jab at the alliance, criticising “fairweather friends” in his address to a packed crowd at the Brisbane Convention Centre.
“We are looking for companies that want to become part of the fabric of our communities, partners who will share in the good times, and partners who will remain steadfast in our communities in the challenging times,” he said.
“We are not interested in fairweather friends who come running for the dollars when things are good, and then abandon Queenslanders in the name of shareholder interests.”
In response, the Queensland Resources Council said the sector had been backing the state for some time, supporting 17,000 businesses and more than 1600 charities and sports clubs last year alone.
“The resources sector has proudly supported Queenslanders for decades through both the good times and not so good times in the market cycles,” council CEO Janette Hewson said in a statement.
“Through royalties and taxes paid by our resources industry, all Queenslanders benefit.
“This underpins our state’s economic prosperity and enables government to fund the services we all rely on.”
The premier is set to meet on Friday with the council that has vocally supported royalty changes and offered to work with the government to reform the “defective” regime.
There is speculation the government will offer financial relief via other costs and charges the state imposes on miners, without touching its royalties regime.
The stoush comes after the state government in August finalised a deal with Adani to defer royalty payments in exchange for an expansion of central Queensland’s Carmichael coal mine.
The state’s former Labor government introduced a tiered royalties system in 2022, in which higher revenues are generated during boom periods of high coal prices but less is taken when market conditions deteriorate.
Miners want the tiers adjusted amid rising production costs and weak coal prices.
BHP Mitsubishi Alliance’s Adam Lancey said his company paid about eight times more in royalties than it made in profit after announcing the layoffs.
Yet according to one an expert, royalties only play a small part in the financial issues facing the state’s coal mines, pushing back at speculation the scheme would put off investors.
“It’s not that Queensland is not investable. It’s just that coal mines are not a good investment right now,” Andrew Gorringe of the Institute for Energy Economics and Financial Analysis said on Tuesday.
“The major driver of the future viability of coal mines in Queensland is the price for the coal – it’s not sufficiently covering the cost to produce it.”
Rising costs have been impacting the industry for some time and squeezed profit margins for miners, he said.
Unit costs – the expense of producing a tonne – for metallurgical coal miners in Queensland had risen by up to 50 per cent since 2018.
“There are many contributing factors for this, including Queensland’s higher royalty rates – but royalties have risen by a lesser amount than the other cost factors,” Mr Gorringe said.
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