BHP CEO Mike Henry takes aim at Qld’s coal royalties saying ‘difficult decisions’ ahead

BHP's boss has fired a dramatic shot at Queensland's 67 per cent mining tax rate, saying there will be ‘more difficult’ decisions ahead, leading the way to potentially more mine closures.

Australia’s largest miner has warned even more difficult decisions could be made in its Queensland business as high royalties and wages cause wafer-thin margins.

BHP chief executive Mike Henry has taken aim at Queensland’s coal royalties regime saying “difficult decisions” were coming, foreshadowing the possibility of more pit closures.

The mining giant blasted the controversial Queensland coal royalties scheme as “unsustainable” earlier this week in a review of its operations,

It also confirmed its Saraji South pit, which is part of the Saraji mine complex in the Bowen Basin, will be placed into a period of care and maintenance from November 2025.

At the company’s AGM in Melbourne on Thursday, Mr Henry again targeted the royalties scheme and called for Queensland to come in line with its competitors.

“The ask that we put forward, and I know many of our peers in the sector agree with, is a very simple one and that is that Queensland bring its taxes and royalties in line with our competitor countries around the world,” he said.

“I think that’s pretty sensible. Government inactions do have real impacts on regional jobs and towns and without change inevitably there’s going to be more difficult decisions that need to be made.”

BHP chairman Ross McEwan and CEO Mike Henry at the BHP AGM in Melbourne.

In response to shareholder questions, BHP chairman Ross McEwan said while there have been

labour cost increases and coal prices have “come off a bit”, the key driver of the lack of returns for shareholders is around taxing and royalties.

“You just cannot run a business at 67 per cent tax position and expect to make money on that for our shareholders. So at 1 per cent return, that’s not getting investment,” he said.

Mr McEwan warned shareholders that the royalties scheme was crippling investment and the BHP Mitsubishi Alliance paid $1.6bn last year.

Excessive coal royalties have been blamed for wave of job losses in the sector.

“At the end of the day, tax and royalties do come together as tax payments to a state or federal government. And those numbers, as were said, in Queensland, are just too high, and therefore just don’t expect investment in those areas,” he said.

“Other areas of Australia, we’re investing very heavily in. The capital, your capital, needs to go somewhere else. So that’s the underlying position on our position we have on BMA, the Queensland business.”

In September the company announced it would cut about 750 jobs across its Queensland coal operations, primarily corporate and support roles.

In the last month, Anglo American also cut almost 200 positions at its Grosvenor mine and Brisbane offices.

Private Queensland miner QCoal will close down one of its underground units in the Bowen Basin, putting about 80 miners out of work because of high costs including the state government’s controversial royalties scheme.

In July, administrators moved in on Bowen Coking Coal which operates the Burton mine and at least 300 jobs have been lost.