Australian miners 'shocked' by hike to coal royalty rates
September 12, 2012, 11:59 am TWN
SYDNEY -- Australia's mining industry on Tuesday warned of job losses, mine closures and projects put on hold after the Queensland state government announced a hike in the royalty rates paid on coal.
In handing down its annual budget, Queensland said royalties would jump from 10 percent to 12.5 percent for every tonne of coal sold for between AU$100 and AU$150 from the beginning of October.
Coal sold for more than this would attract a 15-percent levy.
Rio Tinto said it was “shocked” at the hike, saying it flew in the face of the efforts being made by mining companies to improve competitiveness of their operations by reducing costs.
“We are shocked, surprised and very disappointed by the size of the royalty increase that has been imposed by the Queensland government,” said Bill Champion, managing director of Rio Coal Australia.
“This increase will further endanger jobs and investment in the coal industry, at both existing mines and new projects.”
Rio employs more than 2,400 people at its three open-cut and one underground coal mines in the state.
Fellow mining giant BHP Billiton was equally stunned, saying there was no consultation about the specific higher royalty rates.
“BHP Billiton is disappointed that an increase in coal royalties was announced by the Queensland government today, especially an increase of this magnitude,” it said in a statement.
“Queensland already had one of the world's highest comparable coal royalty regimes.
“We have made it clear to the Queensland government that any additional royalty impost will directly impact the profitability of our existing operations, and will affect future business decisions regarding growth capital allocation.”
Mining companies across Australia have moved in recent weeks to cut costs and defer or shelve new investment plans as commodity prices fall.
On Monday, BHP announced it will cease production at its coking coal joint venture with Japan's Mitsubishi Corp. in Queensland from Oct. 10 and review other assets.