BHP coal revenue soars but it warns royalties will cripple investment
BHP achieved a 225 per cent increase in its average metallurgical coal price in the past financial year, but has warned that it was assessing whether the life of its coal mines in its BMA joint venture in Queensland would be shorted by the State Government’s increase in royalties.
BHP CEO Mike Henry said the royalty hike would damage Queensland's reputation (AAP Image/James Ross)
BHP said the effective pre-tax royalty rate it would pay had increased 7 per cent to 19 per cent under the new regime announced in the Budget and would discourage investment and operational growth as well as damage Queensland’s reputation as a stable place for investment.
In the release of its annual production report, BHP chief executive Mike Henry said its coal division had performed strongly despite wet weather interruptions and labour issues related to Covid-19.
Coal production was down 9 per cent.
“BHP is assessing the impacts on BMA economic reserves and mine lives as a result of the increase in coal royalties by the Queensland Government,” Henry said.
“The near tripling of top end royalties has worsened what was already one of the world’s highest coal royalty regimes, threatening investment and jobs in the state.”
The company said the average realised price for the year for its metallurgical coal was $US423 a tonne ($A621).
The BMA joint venture produced 9 per cent less coal in the year compared with 2021, but its June quarter indicated a turnaround with a 3 per cent increase compared with the March quarter. Its guidance for the current year was an increase of anywhere up to 10 per cent.
However, its costs were rising following the sale of its other joint venture with Mitsui, known as BMC, and rising electricity and diesel costs.
