Whitehaven Coal has added itself to the long list of coal companies expressing grave concerns about the impact of increased royalties on their business (see full statement below).
Whitehaven has been developing the Winchester South open-cut coal mine project near Moranbah in Central Queensland since the beginning of 2019, which involves nearly $1 billion in capital investment and 500-plus jobs.
Winchester South is the publicly-listed Australian company’s first development in Queensland and will primarily produce steelmaking metallurgical coal.
Whitehaven joins a raft of other companies speaking out against the Queensland Government’s decision to lift coal royalty taxes to the highest rates in the world.
Queensland Resources Council (QRC) Chief Executive Ian Macfarlane said today Treasurer Cameron Dick’s continued claims that consultation about the royalty increases took place with industry are incorrect.
“The Treasurer needs to look up the definition of consultation,” Mr Macfarlane said.
“Simply telling the QRC or a coal company that rates are going up – just before they were announced in the budget and without providing any details about the scale of the increase – is not consultation.
“After months of trying to secure a meeting with the Treasurer to discuss royalties, when we finally got in to see him, we were told the increase was happening and that was it.
“There was no opportunity for negotiation or discussion about the impact on our industry.”
Mr Macfarlane said the extra amount of royalty tax the State Government is telling Queenslanders the new regime will raise this financial year (from July 1) has already been generated in the first six weeks, costing the sector about $18 million a day and totalling close to $800 million so far.
“This is an astronomical amount of money to rip out of the resources sector in a short space of time. It’s a terrible situation to have been placed in by our own state government,” he said.
“It comes at a time our sector had been going from strength to strength because of strong commodity prices, which is what drives the Queensland economy and employment.”
On Tuesday, Australia’s biggest mining company BHP announced it had paused its investment plans in Queensland due to the sudden increase in State Government royalty taxes.
Mr Macfarlane said the Queensland Government has harmed Queensland’s international reputation as a safe place to invest in resources projects.
“Coal companies, large and small, are saying to us they’re going to have to put a hold on investments for now and see what happens with the State Government around royalties,” he said.
“There was no need for the government to impose a ‘super tax’ on coal because Queenslanders were already benefiting from higher coal prices under the previous royalty regime.*
“Under the previous system, last year Queensland coal companies paid more than $7 billion in royalty taxes – which is four times as much in royalty taxes compared to the previous year,” he said.
“As commodity prices go up, so do royalties – that’s how the previous system worked."
“The State Government is effectively killing Queensland’s golden goose – the resources sector – and placing at risk the economic and employment future of the state.”
The statements below have been released by companies in response to the Qld Govt’s decision to increase coal royalties:
Attribute to Whitehaven Coal
“Whitehaven Coal wishes to clarify it does not support changes the Queensland Government has made to increase coal mining royalties. Whitehaven is one of a number of companies and other stakeholders that have spoken out publicly against the royalty increase which the company believes undermines Queensland’s reputation as an investment destination.
On 18 July 2022, in response to questions on a teleconference with equity analysts for Whitehaven’s June 2022 Quarter Production Report, Managing Director and CEO, Paul Flynn said about the royalty increase:
It’s hard to speak too nicely about that, what’s gone on in Queensland. I think that’s very negative one way or the other [and] the lack of consultation and just the dramatic nature of it; it’s clearly not a royalty, it’s a tax. So, look, we hope certainly there’s no change to the position in New South Wales and we’ll be making sure that the New South Wales Government leading up to the election in March next year understands the critical role that the resources sector plays in New South Wales and the need for further investment requires certainty in that regard. So, the unpredictable nature of things such as [what has] occurred in Queensland, don’t really foster the confidence necessary to commit billions of dollars in capital to the likes of projects that this industry typically spends.”
Vitrinite Ptd Ltd
Attribute to Founder and Managing Director, Nicholas Williams
“Vitrinite is a young, progressive, privately owned Queensland company. We find both the scale and the introduction of the new coal royalty scheme by the Queensland Government extremely disappointing and crippling to an industry already facing impossibly strong headwinds.
The lack of consultation, the haste of implementation and lack of due process is un-Australian and an affront to our democratic processes and values, particularly when the industry has already been singled out by China for punishment due to poor diplomatic efforts on by the Government.
Commercially, a hike of such an extreme magnitude risk making Queensland un-investable. Investors and entrepreneurs will certainly flee and avoid Queensland now that the precedent has been set for sudden and draconian changes to government policy. This money grab against one specific industry during a short window of good fortune, after so much volatility and uncertainty, is disingenuous.
We urge the government to immediately retract this onerous new tax for the good of all Queenslanders and Australians who enjoy the massive financial benefits opportunities provided by its largest and most valuable industry through already excessive royalties and taxes.”
Coronado Global Resources
Attribute to Coronado Global Resources
“Coronado Global Resources is disappointed by the increase in coal royalties announced by the Queensland state government.
Coronado supports commentary from the Queensland Resources Council who have articulated the risks of raising royalties without industry consultation and the negative impact these higher taxes will have on investment. While the sector has benefitted from the recent strong pricing cycle, royalties paid to the state government under the now legacy royalty arrangements have also been highly elevated.
Coronado continues to be a significant employer of choice in Queensland and already makes significant economic contributions to both federal and state government and the community. We continue to pay our share of royalties, corporate tax, payroll tax, land tax, tenement rentals, and financial provisioning scheme deposits.
Unlike some of our peers, Coronado is a geographically diversified metallurgical coal producer with operations in Queensland and the United States. Our high-quality Buchanan and Logan met coal mines in the United States will not be impacted by this royalty increase.
Companies will always consider investment decisions on a case-by-case basis, and the imposition of additional royalties on Queensland business puts it at a competitive disadvantage to lower cost jurisdictions within Australia and overseas.”
Bowen Coking Coal
Attribute to Executive Chairman, Nick Jorss
“We are extremely disappointed in the way this massive royalty hike has been implemented without any consultation upon an industry that already pays billions of dollars annually in taxes and royalties to fund schools, hospitals and services for all Queenslanders.
Bowen Coking Coal is a local Queensland business built from scratch, not an international mining house. We are creating over 500 Central Queensland jobs as we open three metallurgical coal mines this year to supply the global steel industry.
This tax grab will permanently bake in Queensland as the regime with the highest royalties in the world, ostensibly to solve a near term Government funding issue. This raises substantial risks to further investment in Queensland mining and regional Queensland jobs. I believe it is important that the Government now sits down with the industry to try and find a workable and equitable solution.”
Attribute to Edgar Basto, President Minerals Australia, BHP
“We are deeply concerned about the negative impact this new tax will have on production, jobs and the communities of Central Queensland. The cost of doing business in Queensland is already high, and further cost pressures will discourage investment, operational growth, job creation and local business spending across the state.
A new tax damages Queensland’s reputation as a stable place to invest, and will make it harder for the state to compete against other global jurisdictions in attracting major new investments that would deliver longer term value to communities and the state economy.”
Bravus Mining and Resources
Attribute to a Bravus Mining and Resources spokesperson
“This latest Queensland Government cash grab from the resources sector not only threatens the livelihoods of hard-working regional Queenslanders, but also the future and prosperity of communities like Townsville, Rockhampton, Clermont, Moranbah, Emerald and Mackay.
Our industry carried Queensland through the global pandemic, creating jobs and contracting opportunities for thousands of workers and injected billions of dollars into the state at a time of great uncertainty.
Investing in and operating coal mines requires stable government policy and now the Queensland Labor Government has made a decision which will seriously impact the competitiveness of our industry. This means that new investment in coal projects and the jobs that go with it are more likely to occur in places other than Queensland.
It beggars belief that once again regional Queenslanders are being fleeced to plug Labor’s budget black hole in Brisbane.”
Attribute to acting CEO of AngloAmerican in Australia, Nick Barlow
“Queensland’s coal royalty rates were already amongst the highest in the world. This new tax is inconceivable, and it will place a heavy burden on our sector and Queensland mining regions.
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.
Significant capital investment is required to sustain mining operations, including in constructing and preparing mining areas, mining equipment and infrastructure.
In a highly cyclical business, we need higher price periods to make these investments, which not only create jobs and support our regions, but also benefits the Queensland economy.
We estimate the new tax will mean that we will now contribute around 60% of our profits to Governments, when you take into account state and federal taxation.”
*Under the new system, royalty taxes paid by coal producers this FY will rise from about $7.3 billion under the previous regime – which was almost four times higher than the previous year because of higher coal prices – to around $16 billion. Once gas and metal royalties are included in this figure, the total amount of resources royalties to be collected this financial year by the Queensland Government will reach about $18.3 billion.