Coal royalty holiday for critic of Labor super-profits mining tax

The chief critic of Queensland Labor’s coal royalties super-profits tax quietly received a royalty holiday from the ousted ALP state government.

Bowen Coking Coal’s Nick Jorss at the Future Resources 2024 event in Brisbane. Picture: Lyndon Mechielsen

The chief critic of Queensland Labor’s coal royalties super-­profits tax, Coal Australia and Bowen Coking Coal head Nick Jorss, quietly received a royalty holiday from the former state government.

Cash-strapped ASX-listed Bowen Coking Coal negotiated a royalty deferral with the government’s Queensland Revenue Office in September 2023 and re-inked the deal in August this year, just before peak body Coal Australia spent $1.6m during the election campaign in an attempt to unseat Labor.

Bowen Coking Coal executive chair Mr Jorss said the previous government had granted the small mining company a deferral of $74.6m in coal royalties; $41.6m has been repaid and $33m was outstanding, plus interest.

It is understood the QRO will sometimes negotiate royalties payment plans with mining companies when forcing an operation to pay the taxes upfront could risk its ongoing viability.

Then Labor treasurer Cameron Dick caused an industry revolt when he introduced the hiked royalties regime in the 2022 budget, after a decade-long freeze, delivering an extra $9.4bn into the state’s coffers.

The new royalty tiers were legislated in September; at the time, Mr Dick said the tax regime meant “Queenslanders receive a fair share on the coal that belongs to them”.

New Liberal National Party Premier David Crisafulli has insisted he will not change the royalty tiers, despite intense pressure from the industry.

LNP Mines Minister Dale Last told the Queensland Resources Council’s end-of-year event last week that the mining sector underpinned the state economy. “Our government will foster a taxation and regulatory environment built on stability which will deliver strong investor confidence in Queensland,” he said.

Mr Jorss said the “untimely introduction” of the higher royalty rates, just as the company shipped its first coal from the Bluff coal mine near Blackwater, “had a direct negative impact on the ability of the operations to generate a profit”.

“As a producer of a high value product, the mine was forced to incur the top rate of the new royalty tax of 40 per cent of incremental revenue, which was inconsistent with the cost base of the asset,” he said.

Former Queensland treasurer – now Labor Deputy Opposition Leader – Cameron Dick

The company shut the mine last year, costing 500 jobs. It still operates the Burton mine in central Queensland, which employs about 500 people.

Mr Jorss said the state’s royalty take of $60.2m in the 2023-24 fin­ancial year “soaked up all Bowen’s pre-royalty operating cash flow for the year as we worked through our start-up period”.

“Having invested significant capital in our operations, our investors, including many Australian mums and dads, have yet to see a return on their investment whilst paying these hefty taxes to the Queensland government,” he said.

The company recently raised $70m in extra equity from shareholders and Mr Jorss said it had “come through our recent financial difficulties,” which saw its shares placed in a trading halt for nearly a week.

Mr Jorss said his company and other Queensland miners would continue to push for “an equitable royalty system”.

“We fully recognise the new government’s need to repair the budget and meet its election commitments, however within these bounds Queensland needs a sustainable royalty system to reopen mining for business as soon as practically possible,” he said.

Mr Dick, now Queensland Labor’s Deputy Opposition Leader, said: “Mr Jorss’s company encountered some difficulties and we acted to support his company and the jobs it provided. We were happy to do so because of how important the coal industry is to Queensland.”

During the election campaign, Coal Australia 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.

This month, The Australian revealed coalmining company Adani Mining Pty Ltd – now trading as Bravus Mining and Resources – had been locked in a highly secret battle with the state government over its royalties deal for more than a year.

Under the deal locked in by Annastacia Palaszczuk in 2020, the company was supposed to have its royalties deferred for a certain amount of time before they were repaid with interest.

But the dispute meant Adani paid more than $148m direct to the Queensland government. No deferral has occurred, and the two parties are in arbitration to try to resolve the stoush.