Royalty rates of 40% will make investors think again before making major new resources investments in Queensland, making it harder for all Queensland resources companies to secure capital for new projects.
Raising royalties – it’s about more than coal
Warren Pearce, Chief Executive Officer, Association of Mining and Exploration Companies
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espite the impact COVID-19 has had on supply chains globally, Queensland has experienced record coal production and exports over the past two years while trading at record highs and near-record levels of mineral investment across exploration in all commodities. This has largely been credited to industry and government working hand in glove to keep the industry moving forward, alongside a stable regulatory environment with fair and consistent taxes. 28
BBMC Yearbook 2022
But mid-way through 2022, this all came to a grinding halt when the Queensland government blindsided industry and re-wrote the royalty rules, imposing three new trigger points for higher mining royalties and ending a decade-long freeze on coal royalties. Despite already imposing the highest coal royalties in the nation, the new rate of 40% was predicted to net the state $1.2 billion over the next four years. In reality, this cash grab will collect billions more, and breaks the government’s promise not to increase taxes during the term. While only coal companies will pay the increased royalty, lining government coffers and boosting budget surplus, the decision has and will continue to have much broader implications for the entire Queensland resources sector and the State of Queensland. Royalty rates of 40% will make investors think again before making major new resources investments in Queensland,
making it harder for all Queensland resources companies to secure capital for new projects. Queensland Treasurer Cameron Dick came under fire for the increase, and rightly so, after repeatedly promising no new or increased taxes during the 2020 state election campaign. He not only drew the ire of the industry but also of the Japanese ambassador to Australia, Mr Shingo Yamagami, who expressed concern that there was no consultation, and that the state’s decision could damage Queensland’s decades-long reputation as a safe and reliable destination for investment. He said, given the long history and relationship between Japan and Queensland, he would have expected the government to consult with Japanese companies before making changes. For many years, Queensland and Japan have had strong and complementary trade relations, while in more recent years, Japan has been