Queensland Threatens to Cancel BHP’s Coal Leases

The company logo adorns the side of the BHP gobal headquarters in Melbourne, Australia on Feb. 21, 2023. William West/AFP via Getty Images

Queensland Treasurer Cameron Dick threatened to cancel BHP’s coal mine leases if the mining giant stops investing in the state as the Palaszczuk government seeks to raise taxes on mining companies.

“What I would say, if BHP or any other company fails to meet their mining development obligation without genuine commercial reason, our government has the ability to cancel those leases,” Mr. Dick told The Australian.

Mr. Dick’s statement came as BHP published its fiscal 2023 financial results on Tuesday and a month after the company announced it would no longer invest in further growth in Queensland.

BHP said that its decision is due to the state having the “highest coal taxing regime in the world,” which negatively impacts the company’s investment economics and increases sovereign risk. The company, however, is committed to sustaining and optimising its existing operations (pdf).

“We won’t hesitate to act if valuable tenures are being misused, and not being mined when it is clearly commercial to work those tenures,” Mr. Dick said. “BHP has legal obligations, and there are significant consequences for not meeting those ­obligations.”

In an email to The Epoch Times, Geoff Breusch, principal media adviser for the Office of the Treasurer, said, “Any decision by the Minister for Resources would be made in accordance with section 308 of the Mineral Resources Act.”

In June, BHP CEO Mike Henry said that it is easier to deal with Chile, whose mining sector has been plagued by protests and proposals to raise taxes, than it is with the Queensland government.

“In Chile, there was a push to raise copper royalties. Notwithstanding a government for the strong left, they engaged industry and sought to understand and work towards an outcome that struck a balance between public needs and what was required to keep industry and the country competitive,” Mr. Henry said at the World Mining Congress in Brisbane on June 27.

“By way of contrast, and it saddens me to have to say this on this stage and in this place, but I think we owe it to our host state and to this audience, to be honest—here in Queensland, the approach to raising royalties could not have been more different. No industry engagement, no effort to understand, and no interest in understanding.”

Queensland Regional Council Criticizes Mining Tax

The Queensland Regional Council (QRC) said the state is losing its competitiveness and that BHP’s decision to stop further investment due to an increase in sovereign risk should serve as a warning to the state.

The council noted that Queensland’s mining tax is five times higher than that of New South Wales and has already eliminated $2 billion (US$1.28 billion) of new investment and 2,000 jobs after its introduction without industry consultation.

“Queensland is losing its competitive edge when it comes to attracting investment in major new projects because investors are pulling back due to growing uncertainty about the state government’s heavy taxing policy regime,” QRC’s chief executive Ian Macfarlane said.

“As with any resources downturn, regional Queenslanders will be hardest hit when investments start moving away to other states and countries.”

The three-tier royalties regime introduced last year brought in billions of extra revenue and helped the Palaszczuk government deliver a record $12.3 billion surplus in 2022-23.

BHP’s FY23 Profit Declines

BHP said its attributable profit from total operations plunged 58 percent to $12.9 billion from $30.9 billion, attributed to weaker key commodity prices and inflationary pressures. Revenue fell 17 percent to US$53.8 billion from US$65.1 billion.

Its board declared a fully franked final dividend of 80 US cents per share, bringing total cash returns to shareholders to US$1.70 per share.

The company said that it expects the lag effect of the inflation peaks in fiscal 2023 and the continued tightness of the labour market to still impact its cost base throughout fiscal 2024.

“Australian governments need to avoid workplace laws that impair productivity and impede investment, CEO Henry said in a teleconference on Tuesday. ”Policy matters ... policy impacts on overall returns.”

Meanwhile, Mr. Henry said that BHP was investing more than $1 billion a year in the Bowen Basin, in response to Mr. Dick’s threat to revoke its licenses. According to BHP, the new royalty regime led to an additional US$700 million (A$1 billion) in royalties paid to the Queensland government in 2022 to 2023.

AAP contributed to this article.