Qld mining royalty rise: Coal earnings 24 times faster than forecast

What was supposed to take four years has instead taken just two months, with the State Government wallowing in coal royalties.

The Queensland government looks set to rake in $1.2b in coal royalties in just two months, despite forecasts that it would take four years, according to the state’s peak industry body.

The massive boost to government coffers has been seized upon by Queensland Resources Council chief executive Ian Macfarlane, who said $800m had been made in just six weeks.

But a spokesman for Treasurer Cameron Dick said that if returns were higher, it was because mining companies were enjoying “supernormal profits due to supernormal prices”.

The government has been repeatedly slammed for hiking coal royalties following its announcement at the June Budget, with the resources sector claiming it wasn’t consulted and that it risked future investment.

Treasurer Cameron Dick

It prompted the extraordinary intervention by Japanese ambassador to Australia Shingo Yamagami, who in July said he was concerned the royalties increase could damage the trust and goodwill of Japanese businesses.

Mining giant BHP last week confirmed it had shelved a $1b coking coal project, and some mines could close early, due to both the royalties increase and the long-term outlook for metallurgical coal shifting as key countries announced new climate policies.

Mr Macfarlane said the QRC had been tracking daily coal prices and had made economic assumptions based on what mining companies had previously earnt.

“They (government) were going to collect an extra $1.2b over four years but they will get that at the end of this month,” he said.

“If they’d used anyone’s economic forecast but their own they would have seen that (that they were going to make more than $1.2b).”

Queensland Resources Council chief executive Ian Macfarlane

A spokesman for Mr Dick said Treasury would update revenue forecasts in the mid-year Budget Update that’s usually held in December.

“If returns from new bipartisan, progressive coal royalties are higher, it is because mining companies continue to enjoy supernormal profits due to supernormal prices,” he said.

Mr Dick’s office could not say whether Treasury’s forecasts predicted hitting $1.2b within the first two months.

The royalties increase, which is the first hike in a decade, follows record coal prices.

The government has added three tiers to the existing structure, with companies now paying 20 per cent on the dollar when coal prices exceed $175 per tonne, 30 per cent on the dollar when they exceed $225 per tonne and 40 per cent when they exceed $300.

Mr Macfarlane said the QRC expected the government to raise $7.2b “over and above” what was forecast across the forward estimates.

“The whole thing is incomprehensible,” he said.

Originally published as Qld mining royalty rise: Coal earnings 24 times faster than forecast