Mining giant BHP halts massive new coal mine over Queensland royalty standoff
Queensland's $4.3bn mining spending collapse exposes the stark reality behind BHP’s approved coal mine that may never proceed under current royalty rates.
A global mining giant is holding the Queensland government to ransom over billions in royalties, even after securing state approval for a massive new coal mine.
This comes as the Queensland Resources Council’s latest economic impact report revealed the mining sector’s direct spend in the state had fallen by $4.3bn in 12 months, prompting a regional industry group to call on the Queensland government to review the royalty structure.
BHP Mitsubishi Alliance was given the green tick for the Saraji East mine in the Bowen Basin this week, but declared it would not commit to investing in the 110 million-tonne metallurgical coal project under the state’s “unsustainable” royalty regime.
The proposed project, deemed suitable under conditions following a review of its environmental impact statement, is planned as an 11,427 hectare single-seam underground mine adjacent to, and accessed through, Saraji open cut mine.
The mine is expected to support up to 1000 construction jobs and 500 operational jobs and produce up to eight million tonnes of met coal per year over 20 years.
However BMA recently mothballed its Saraji South mine in September, blaming the state’s royalty settings for problems in the resources sector.
The company also announced it was axing 750 jobs across Queensland, low-margin operations would be suspended and uncertainty surrounded the future of the Future Fit Academy in Mackay.
A BMA spokesman said the EIS helped the company “preserve future development in Queensland” but that any “future decisions on capital investment or development are separate to the assessment process”.
“As previously announced by BHP, we are not committing to investing in any expansion or growth of our operations in Queensland, under the Queensland government’s unsustainable royalty regime,” he said.
In its environmental impact statement, BHP said “increased demand for coal products in India, China and other international markets, particularly for steel manufacturing, has created additional export opportunities for the development of this new mine”.
Premier David Crisafulli ruled out changes to the state’s royalty regime, introduced under the previous Labor government, despite mounting pressure from the industry.
‘At tipping point’
In the past 12 months the coal mining sector’s direct spend in Queensland has dropped by $4.3bn, while across Mackay Isaac Whitsunday direct spending by coal mining has fallen by nearly $3bn over the past two years.
As a result the Resource Industry Network is calling on the Queensland government to review the current coal royalty structure and work with industry to develop a different approach.
RIN general manager Dean Kirkwood said when the coal sector slowed, the ripple effects were felt across every corner of regional Queensland.
“Queensland’s coal industry has powered our state for decades. But right now, regional Queensland is at a tipping point,” he said.
“This isn’t just about mining companies, it’s about the thousands of small and medium Queensland-owned businesses that keep this industry running.
“These are the manufacturers, engineers, workshops and service providers whose work underpins our mining operations and our communities.”
Mr Kirkwood said when companies faced significant cost pressures, they were forced to reduce spending wherever they could.
“That means less investment in our regions, fewer contracts for local suppliers, and reduced contributions to community organisations,” he said.
RIN members, many of who were based across Mackay Isaac and Whitsunday, were concerned “about what the current environment means for their operations and staff”, Mr Kirkwood said.
“A strong resources sector means strong regional communities,” Mr Kirkwood said.
“Regional Queensland has powered this state for generations. It’s time to ensure those regions have the support they need in return.”
RIN members planned to visit Queensland Parliament in December to share firsthand the impacts of the current royalty settings and present the Regions Before Royalties petition and advocacy campaign to regional MPs.
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