BHP hits back after Treasurer Cameron Dick threatens to strip BHP of mining leases

Mining giant BHP has doubled down on its promise not to invest in growth in Queensland as a battle with the state government over royalty regime changes hits its lowest ebb.

Mining giant BHP has doubled down on its promise not to invest in growth in Queensland as a battle with the state government over royalty regime changes hits its lowest ebb.

It came as Treasurer Cameron Dick, in his harshest direct assault against the company yet, threatened to revoke mining leases if development wasn’t being carried out for non-commercial reasons.

BHP, and its joint venture in Queensland BMA, have been at the forefront of the fight between the resources industry and the state government over its controversial mining super profits royalty changes.

In 2022/23 the company made US$12.9bn in profit, with shareholders receiving a US80c final dividend taking the full-year total to US$1.70 a share — the fourth highest in history.

But it also paid AUD$1.09bn more in royalties, with the BMA joint venture paying more than AUD$5bn to the state government in taxes and royalties.

The company made clear in its announcement to the Australian stock exchange on Tuesday the royalty rate changes in Queensland had increased “sovereign risk”, so it would not be “investing in any further growth in Queensland”.

Queensland Treasurer Cameron Dick. Picture: Liam Kidston

This signals no new or expanded metallurgical coal mines despite global appetite and the high-grade of resource available under Queensland soil.

The company is set to soon finalise the sale of two lower-quality metallurgical coal mines in Queensland - Daunia and Blackwater - in coming months

BHP managing director Mike Henry made clear the company was still spending $1bn a year on its existing projects.

Mr Dick has been increasingly spruiking the royalty regime changes which netted the government a whopping $15.3bn windfall in the latest budget - three times what was forecast.

He warned BHP the government had the legal power to revoke mining leases if the company failed to properly develop them “without commercial reason”.

Borrowing from former federal resources minister Matt Canavan, Mr Dick said BHP were obliged to “use it or lose it”.

BHP chief executive officer Mike Henry. Photo: Aaron Francis / BHP

Mr Henry didn’t directly address Mr Dick’s barbs, only saying he believed BHP’s firm position on no further growth under the new royalty regime was “uncontroversial”.

“In essence, what we’re saying is if returns go down and risk goes up of course that makes investments elsewhere, in relative terms, more attractive,” Mr Henry said.

“I think you’d find any business or frankly any of us in our personal finances would look at it in exactly the same way. So I think our position is relatively uncontroversial.”

Queensland Resources Council chief executive Ian Macfarlane said Mr Dick’s comments would “further affect investor confidence” with the regions to pay the highest price through job losses.

“Like any publicly listed company, BHP makes commercial decisions based on the best interests of shareholders. These shareholders include Queensland mum and dad investors who expect a fair return on their investment,” he said.

Mr Dick on Tuesday told Parliament: “Our government wants resources companies operating in Queensland to be successful and we want those companies to properly develop the leases that they have been granted by the people of Queensland.”

“If they fail to do so without legitimate commercial reason our government has the power to act, the Minister for resources can impose financial penalties if lease obligations are not complied with…and (they) have the power to cancel a lease,” he said.

Originally published as BHP hits back after Treasurer Cameron Dick threatens to strip BHP of mining leases