Coal, Commodities, Finance, News

‘Very disappointing’: Qld coal sector slams royalty hikes

royalty

The Queensland Government has hit coal producers with its first royalty increase in more than a decade as the state looks to boost investment in regional hospitals.

It coincides with the end of a 10-year royalty freeze on June 30, considered the longest pause on Queensland coal royalties in the state’s history.

Announced as part of the 2022–23 state budget, the new tiers of taxes are structured as follows:

  • For prices below $175 per tonne, it remains as per existing regime
  • 20 per cent for prices above $175 per tonne
  • 30 per cent for prices above $225 per tonne
  • 40 per cent for prices above $300 per tonne

Queensland Treasurer Cameron Dick said the existing rates do not account for the unprecedented windfall prices that coal producers are now receiving.

“Our existing coal royalty tiers were primarily designed for lower coal prices, with a top tier at $150 per tonne, with royalties charged at 15 per cent,” he said.

“However, with coal recently trading at over $500 per tonne, our current rate structure is clearly no longer fit for purpose.”

Stanmore Resources, one of Australia’s largest coal suppliers with a Queensland-focused portfolio, said the royalty increases weren’t necessary given the state’s coal sector was still recovering from a market downturn in 2020 and 2021.

“Stanmore is very disappointed with these extraordinary tax increases given its commitments to the Isaac Downs project and re-opening of the Millennium and Mavis mines,” Stanmore chief executive officer Marcelo Matos said.

Matos also highlighted the company’s recent $US1.2 billion ($1.73 billion) investment in the Queensland coal sector through the acquisition of its 80 per cent in BHP Mitsui Coal (BMC), while suggesting Queensland’s royalty rates were already among the highest in the world.

“The increases to the royalty rates without formal notice or consultation with the industry are unprecedented,” Matos said. “The impact of these increases will be felt the most by workers and suppliers in regional Queensland communities that underpin the resources sector and make it Queensland’s largest export industry.”

Queensland Resources Council chief executive Ian Macfarlane said the royalty increase would have a flow-on effect for the cost of living through higher electricity prices, higher construction costs and higher-priced consumer goods “that will add to inflation and impact every Queenslander”.

“This is a seriously misguided economic policy that will make Queensland’s number-one export industry and private sector employer less internationally competitive,” he said.

Macfarlane said lifting taxes to fix a hole in the budget was a short-term, political move with long-term consequences for a major wealth-creating sector of the Queensland economy.

“This tax grab has been developed behind closed doors and without consultation with industry,” he said. “It’s a kick in the guts and not a fair deal for the resources sector, which has kept the Queensland economy afloat during the pandemic by supporting jobs and businesses throughout the state.”

Previous ArticleNext Article

JOIN OUR NEWSLETTER

JOIN OUR NEWSLETTER
Close
Send this to a friend