Adani v the state of Queensland: secret royalties fight

The Queensland government has been locked in a secret battle with coalmining giant Adani for years, forcing the latter to pay full royalties upfront instead of the deferral deal locked in by Annastacia Palaszczuk.

Then Queensland premier Annastacia Palaszczuk meets Adani Group chairman Gautam Adani at the Port of Townsville in 2016. Picture: AAP.

The Queensland government has been locked in a secret battle with coalmining giant Adani for years, forcing the company to pay full royalties upfront instead of the deferral deal locked in by Annastacia Palaszczuk.

Relations between the mining giant and the Labor government had deteriorated so significantly that in the lead-up to last month’s state election, then-treasurer Cameron Dick ordered the dispute into closed-door Supreme Court hearings in an effort to stop Adani getting access to cabinet-in-confidence correspondence.

The Australian can reveal David Crisafulli and his Liberal National Party government are now saddled with trying to resolve the stoush – secret until now – at a time when the coal industry is ramping up pressure on the new administration to relax Labor’s royalties regime.

Indian-owned Adani Mining Pty Ltd, now trading as Bravus Mining and Resources, operates the controversial Carmichael coalmine in central Queensland’s Galilee Basin, originally touted as Australia’s largest coalmine.

Ahead of the October 2020 election, Ms Palaszczuk and Mr Dick signed a royalties deferral deal with Adani, allowing the company to avoid paying royalties for an unspecified number of years, before requiring it to pay all outstanding tax plus interest at some unknown date in the future.

Since Adani shipped its first coal in June 2021, it has paid more than $148m in royalties direct to the Queensland government.

The deferral has not occurred.

The Australian understands Queensland Treasury claims Adani is breaching the terms of the deal, partly by allegedly failing to take out business continuity insurance for its operations, to rebuild the mine if it is destroyed by a natural disaster.

That allegation is strongly denied by Adani, which is understood to have forced the dispute into private arbitration.

When the company asked for the government to give the arbitrator confidential correspondence involving Mr Dick and relating to cabinet matters, the Labor government applied to the Supreme Court for an intervention.

The legal move occurred during the caretaker period prior to the October 26 election.

The matter is so secret that it does not appear on the public ­record of civil cases filed in Queensland.

A Bravus spokeswoman said the company had “met all our obligations under the royalty deferral agreement”, which was “governed by strict confidentiality provisions imposed by the previous state Labor government”.

She said the company was limited in what it was allowed to discuss, but it had invested more than $2.5bn to build the Carmichael mine and railway, which had been operating for more than two years.

“It has already created thousands of jobs for Queenslanders and injected billions of dollars into regional Queensland economies,” she said.

“We have paid royalties owed to the state since mining at Carmichael began, which is more than $150m.”

Deputy Leader of the Opposition Cameron Dick. Picture: Shae Beplate.

Treasurer David Janetzki. Picture: Richard Walker

A spokesman for new LNP Treasurer David Janetzki said as the matter was before the courts, it would be inappropriate for him to comment.

Mr Dick, now the Deputy Opposition Leader, said: “While I cannot comment on specific details, in general terms I hope the Crisafulli LNP government never caves in on any matter to the coal lobby that financed their campaign, including through third-party LNP-front organisations.

He introduced a new super-profits coal royalties scheme in his 2022 budget, after a decade-long freeze, sparking a war with the resources industry.

Mr Crisafulli has promised to keep Labor’s royalties regime the same for his first four-year term in government, despite repeated warnings from the sector that the policy hurts Queensland as an investment destination.

In the days after the LNP’s election win, BHP chief executive Mike Henry said the company would lobby the new government about the tax scheme, which he said made Chile and Canada more attractive for investment.

“What we’re seeing in Queensland right now does not make investments attractive for us, relative to the opportunities we have in Chile, Canada, some of the states in Australia and elsewhere,” Mr Henry said on the sidelines of the company’s annual general meeting in Brisbane late last month.

The coal industry campaigned against the Labor government at the election.

Coal Australia – headed by Bowen Coking Coal’s executive chair Nick Jorss – donated $1.64m to registered third parties running anti-Labor campaigns, including Australians for Prosperity, the Australian Institute for Progress, and Jobs for Mining Communities.

Bravus’s part-time government relations adviser Paul Fennelly is a board member of Jobs for Mining Communities, but the Bravus spokeswoman said the company was not involved at all in the lobby group and Mr Fen­nelly’s involvement was in his own time.

During the 2017 Queensland election campaign, Ms Palaszczuk was dogged by protests and controversy over the government’s support for the proposed Adani mine, and made a surprise decision to veto a federal loan to the ­company.