But BHP chief executive Mike Henry said that in Queensland the company had stopped deploying capital because of the State Government’s hike in royalties in the recent Budget.

This was despite the mountain of cash created in the division over the year.

Its BMA joint venture created $US6.3 billion in underlying EBITDA, up from $US567 million the previous year. During the year, BMA paid out $US1.2 billion in royalties.

“We have since then had changes to Queensland royalty regime which were quite sudden and didn’t engage with any consultation with industry,” Henry said.

“And there has been a significant increase in the sovereign risk involved in Queensland which has caused us to say we can’t deploy further capital into that business for the time being and we will go back and reassess what the plans are going forward.”

The royalty changes, which created new tiers to allow the Government to earn greater revenue as coal prices escalated, meant Queensland had become “less conducive” to long life capital investment.

The company has yet to detail whether that would affect the potential $1 billion investment in the Blackwater South coal project which is going through the approval process with the State Government.

He said in the long term the steel industry would move towards green steel, which would potentially replace coal with hydrogen, but he said it was a multi decade process and in the meantime steel makers would decarbonise through the use of high quality met coal which BHP produces from the Bowen Basin in central Queensland.

The company was able to payout $US3.25 in dividends in the year, including a final dividend of $US1.75, equal to $US8.9 billion.

The overall result was also boosted by the sale of its oil division to Woodside, but it still beat market expectations.

Iron ore profits fell as global prices for the commodity dipped.

In its outlook, BHP said that as China emerges from its pandemic restrictions it would become a tailwind for the global economy, but it expected the overall operating environment to remain volatile.

“Growth momentum has slowed across many key regions and caution remains due to geopolitical uncertainty as well as Covid-19,” it said.

“This is particularly evident in advanced economies as central banks pursue anti-inflationary policy and Europe’s energy crisis is an additional source of concern.”

He said the profit was a strong result for the company and it was entering 2023 in great shape. However, he gave little ground on a renewed bid for Oz Minerals saying BHP had several levers for growth and mergers and acquisitions was just one of them.