Mining boss attacks lightning move to raise royalties

South32 has joined the mining industry attack on Queensland’s decision to hike payments without consulting the sector.

South32 has joined the industry attack on the Queensland government’s decision to hike royalties without consulting the sector.

South32 chief executive Graham Kerr said on the sidelines of the QUT Business Leaders’ Forum in Brisbane that the decision was concerning because of the speed it was implemented.

Mr Kerr said mining companies needed certainty over investment decisions given billions of dollars in capital was usually required to get them off the ground.

The company is currently examining the future of its Eagle Downs metallurgical coal mine in Queensland. South32, which demerged from BHP seven years ago, also operates the Cannington silver and lead mine in north west Queensland.

“When you make that kind of investment, you want some kind of sense of what the lay of the land is in terms of how tax is going to work out,” Mr Kerr said.

“So I think anything where changes come unexpectedly is always a concern. Today there’s actually lots of places to invest. The decision in Queensland came as a bit of a shock to people and it came very quickly.

“We’ve got a project called Eagle Downs that we’re not taking forward at the moment but that is more around where we see the long-term future of metallurgical coal. We’ve got other places to invest our money.”

Mr Kerr said base metals including copper, nickel and zinc would soon make up 85 per cent of the company’s revenue as the global economy positioned to a renewable future.

The company had already invested $1.7bn on its Taylor zinc project in Arizona and planned to open new copper mines in South America. “We’ve got a large number of exploration projects around Cannington, in the northern part of Queensland, but also in the Northern Territory,” he said.

“Predominantly we’re chasing copper, zinc, and nickel.”

Mr Kerr said there were pressures on governments to raise revenue as their economies recovered from the Covid-19 pandemic. “There are challenges across the globe at the moment as everyone’s coming out of Covid and many countries are actually dipping into their own bank if you like,” he said. “Clearly, you’ve got rising inflationary costs across the planet at the moment so I think there is more pressure on governments to find alternative ways of raise revenue.”

The Queensland government this week staged a boycott of the state’s resources sector – with Premier Annastacia Palaszczuk refusing to front the industry’s annual lunch, and ordering her ministers to do the same. That came after the Queensland Resources Council said it would launch an advertising blitz attacking the state’s mining royalty increase.