‘Coal jobs at risk’: Global banks’ Qld mine alert

Two of the world’s leading investment banks have issued startling warnings about the Queensland government’s new coal royalties regime.

Queensland’s new coal royalties regime threatens to damage the sector according to global investment banks as industry figures claim future projects have been thrown into “jeopardy”.

According to a brief to investors, the Royal Bank of Canada believes there “will be an immediate impact on the decisions coal producers take surrounding capital investment and we would expect regional coal volumes to fall over time.”

And JP Morgan believes the Queensland industry “as a whole has become materially less competitive”.

Treasurer Cameron Dick on Wednesday said the changes – expected to inject an extra $1.2 billion over four years into the state’s coffers – were here to stay.

“That will be legislated by the end of the week,” he told the Labor Party’s post-budget lunch.

“I’m not asking the coal industry to agree with them or to support them but I am saying we have these arrangements now and we are ready to work with industry into the future to develop and to grow.”

It comes as the country’s biggest retailers hit out at the new mental health levy, warning it would add pressure to businesses already working hard to combat rising inflation.

Premier Annastacia Palaszczuk and Treasurer Cameron Dick speaking at the post-budget lunch at the Convention Centre in Brisbane on Wednesday. Picture: Steve Pohlner

Premier Annastacia Palaszczuk and Mr Dick were forced to defend the new and increased taxes again on Wednesday, insisting the government had not broken an election promise.

Ms Palaszczuk told parliament that Queenslanders “can trust me” while saying Mr Dick hadn’t broken a promise because he didn’t mention the word ‘business’ when making the pledge.

The Treasurer said the reason why he didn’t mention business was “absolutely 100 per cent clear” because “our promise was to the people of Queensland”.

“Our government stands with and by and for the people,” he said.

“Labor governments deliver for the people and this is our promise.

“I did not make a promise to business.”

The Treasurer pledged there would be no new or increased taxes during the 2020 state election when asked whether there would be any during this term of government on business.

New Hope Group, which owns the New Acland mine that’s currently awaiting final approvals from the state government, said the “extraordinary” royalty increase “without consultation” meant Queensland was “by far the highest taxing mining jurisdiction in the world.”

“Queensland’s high-quality coals are a significant export earner for our state, however, these high taxes will deter investment and impact future growth,” he said.

The Queensland Resources Council has vowed to do everything it can to kill the changes, with boss Ian Macfarlane warning the hike could haunt the government in the years leading up to the election.

Bowen Coking Coal is warning the new mining tax is a threat to jobs.

ASX-listed Bowen Coking Coal — which has three mines in its portfolio — announced it had secured finance to fast track a mine hours before the budget was handed down, with the royalty hike announcement coinciding with a 40 per cent drop in the company’s stock.

Bowen Coking Coal executive chairman Nick Jorss said the biggest threat of the “regressive” tax was to jobs supported and created, particularly in regional areas, by the coal sector.

“This is Queensland’s biggest industry by value in terms of export so I think the stakes are too high for us to not sit down with the state and thrash out something that works rather than this fait accompli regressive royalty regime,” he said.

Baralaba Coal chief executive Andrew Boyd said the increase would make it harder to prove a future project was financially viable and put at risk the 500 jobs its planned Baralaba South mine was due to support.

It is understood a plan to pump $80m of capital into the recently reopened Millennium Mine, owned as a joint venture between M Resources and Stanmore, in the second half of this year had now been put in jeopardy.

Matt Latimore, a major coal investor in Queensland and non-executive director of Bowen Coking Coal and Stanmore Coal, said the royalty hike was “incredibly shortsighted.”

“An increase of this severity means everything is on the table,” he said.

“This is an extreme increase and may call for extreme measures to save the future of met coal in Queensland.”

Anglo American acting chief executive Nick Barlow said the royalty hike would mean the company was now funnelling 60 per cent of its profits to governments after taking into account state and federal tax.

“Our steelmaking coal business in Australia competes for capital against other options within our global diversified mining portfolio, and the new extraordinary progressive tax tiers will hurt the business case for new investment,” he said.

Meanwhile the Australian Retailers Association, whose members include Woolworths and Coles, claimed the new mental health levy would add further pressure on businesses.

A 0.25 per cent levy on businesses with an annual wages bill of more than $10 million will come into effect from January 1 next year.

Businesses with annual wages over $100 million will pay an additional 0.5 per cent.

“Retailers have a strong track record of support for mental health initiatives,” ARA CEO Paul Zahra said.

“Many of these businesses have invested significantly in mental health support for their own staff, taking pressure off the public purse.

“We are disappointed the Queensland government is funding mental health support through a new tax on business.

“With the state government’s strong balance sheet, we would expect this important initiative to be paid for by government, not business.”

Originally published as ‘Coal jobs at risk’: Global banks’ Qld mine alert