BHP’s Slattery fires off broadside at Queensland’s coal royalty regime

BHP Australia President Geraldine Slattery says the ‘sugar hit’ Queensland receives from coal royalties won’t last, as the resource sector is at a `pivot point’ in the transition to new forms of energy.

As calls grow to slow the transition from coal to renewables in the wake of the election of Donald Trump, BHP Australia President Geraldine Slattery has fired a broadside at Queensland’s coal royalty regime, claiming the annual “sugar hit” of billions of dollars in revenue won’t leave the state better off in the long run.

Ms Slattery told a Queensland University of Technology business leaders forum in Brisbane on Monday that the royalty scheme will discourage investors who are seeking more cost-effective alternatives.

“Let’s remember, Queensland is a premier coal producing region, and a major exporter to the world’s steel making sector,” she said in a speech at The Star Brisbane on Monday.

“Yet, the state’s royalty regime is the highest in the world – with the maximum rate some 43 per cent higher than the next nearest jurisdiction, which makes it hard to attract the capital needed for future growth.

“The sugar hit of revenue won’t leave the state better off in the long run if investment is driven elsewhere.”

However, Ms Slattery said she was not advocating a policy critique for the sake of it.

“Rather, I am suggesting that a partnership approach between business and policymakers will likely create better outcomes for all. But it starts with making our views known in a respectful way, rather than grumbling on the sidelines,” she said.

Queensland accounts for 56 per cent of Australia’s coal production. BHP has five metallurgical coal mines in Queensland, with royalties propping up state government coffers since being reintroduced in 2022.

In 2022-23 the coal royalties delivered more than $15bn to the then Queensland Labor governments budget, while in 2023-24 it was $9.4bn.

BHP Australia President Geraldine Slattery at the QUT Business leaders Forum

Mr Trump on the weekend nominated the founder of fracking giant Liberty Energy and climate sceptic Chris Wright as energy secretary, with the aim to turbo charge exploration and production in the US.

Ms Slattery refused to comment on Mr Trump or the call by Glencore chief executive Gary Nagle to the Albanese Labor government to slow down the transition from coal to renewables citing concerns that the country risked falling behind the rest of the world. The government is seeking to reduce emissions by 43 per cent on 2005 levels by 2030 and net zero by 2050.

However, she told the business lunch that the world has become less integrated and was retreating from trade and globalisation – the trends that have shaped business for nearly four decades.

“Everywhere we see the rise of insularity. National champions. Tariffs and trade barriers. War and geopolitical tensions on three continents,” she said.

“At the same time, competition grows globally. The developing world is full of innovation. There’s an abundance of investment capital in every region. Emerging countries are investing in the skills and capabilities of their own people. Europe, the US, and Australia all face new competition.

“And then there are the business headwinds. Inflation. Labour shortages. Economic uncertainty. Threats to shipping routes. Regulatory barriers in every industry. All this amounts to a world that is harder – not easier – to navigate.

“A world where even decades of past growth and success can no longer be taken for granted. A world that feels as if it’s in the midst of a great transition. In this more tumultuous, competitive environment, Australia sits at a crossroads.”

Queensland accounts for 56 per cent of Australia’s coal production.

Ms Slattery said that perhaps more than any other sectors the Australian mining industry was now at a “pivot point”.

“The dominant endowments and markets we have enjoyed for decades are mature and past the period of aggressive growth,” she said.

“A shift to the resources and metals that underpin decarbonisation and a lower carbon future is underway … think copper, nickel, lithium, rare earth metals, lower carbon steel.

“In this shifting world, there are many competitors aggressive in their pursuit of market share and the technology that unlocks a lower cost of supply. Often better placed than Australia.

“The shift in the nickel market tells this story best in the recent past. For BHP, this resulted in the difficult but necessary decision to temporarily suspend our Western Australia Nickel operations.”

Ms Slattery said the business leaders had an obligation to raise the bar when it comes to creating safer and more productive outcomes so the country could retain high standards of living.

“It requires a concentrated effort: in education, in technology, in attracting capital, and streamlining the process for taking on large projects. We need to be honest about the international benchmarks that show we have not been keeping up,” she said.

“We must be a leading voice for greater national competitiveness. We know this is a challenge in Australia. In the resources sector alone, labour productivity has remained flat over the past 20 years.

“Meanwhile, wages have doubled. This is a not a sustainable formula and requires leadership and investment to change course – in greater automation, in smart technologies, in new capabilities, and in industrial relations reform.

“This is a national dialogue. Business leaders must be in the centre of it.”

Originally published as BHP’s Slattery fires off broadside at Queensland’s coal royalty regime