BHP chief executive Mike Henry has always played a smart game and his decision yesterday to put Queensland coal projects in the freezer by stalling capital spending is hell of a whack for the Palaszczuk Government.

To be clear, the company’s next big project, the $1 billion Blackwater South project has not been canned. It is still going through the approval process, but if a decision were to be made on it this week, BHP has signalled it would not be going ahead.

Significantly, Blackwater South was not due for a construction start until 2029 so an investment decision is some way off, so we can put this “capital freeze” down to some very good politics by BHP.

But it’s also more than just words.

Because the company may have to close some of its Queensland coal mines earlier than anticipated because of the Palaszczuk Government’s new royalty scheme it has set aside $US750 million ($A1 billion) for rehabilitation. Companies don’t normally make such adjustments just for politics.

This is damaging stuff for Labor and puts coal back in play as a political football.

It adds to the confusion in the electorate about where Queensland Labor is headed on coal. Certainly, its opposition to thermal coal appears clear but it is even wedged there because it will soon have to make a decision on a mining lease for New Hope’s Acland expansion, which is thermal coal and it has already granted environmental approval.

Adding to that confusion is Labor’s decision to hang on to its coal-fired power stations which make it one of the biggest CO2 emitters in the country. Yet, it is likely to can Clive Palmer’s thermal coal projects.

But coking coal releases CO2 as well. Not just when it is burned for steel making but also in the mining process and the Australian Centre for Corporate Responsibility claims the Blackwater South mine, which is coking coal, would release 1.7 billion tonnes of carbon dioxide if it operated for the full 90 years.

If you’re not confused now, you probably haven’t been listening.

Treasurer Cameron Dick said that while BHP has been moving away from coal mines for the past 20 years, other coal companies “had already confirmed new bipartisan progressive coal royalty arrangements will not have an adverse impact on mining investment decisions”.

The Government has also pointed out that BHP had shelved Saraji East and Red Hill coal projects well in advance of any changes to royalties.

It’s all over the Government’s decision in the Budget to lift coal royalty rates to catch some of the benefit of rising coal prices which reached extraordinary levels earlier this year but have fallen back in recent times.

It angered the mining industry because, firstly, they weren’t consulted, which is not unusual in Budgetary issues, but in this case, they were blindsided. They had every right to be angry. It did appear to make the Government look arrogant.

If this seems familiar it is not unlike the war waged between the Rudd Government and the mining industry over the super profits tax, which damaged the Government and Rudd in particular.

But for all its faults the Palaszczuk Government is not the Rudd Government. Not yet.

BHP also revealed yesterday that coal’s days were numbered as hydrogen appeared to be an alternative coal in the steel-making process, but that was decades away, according to Henry. In the meantime, it still needs Queensland’s high-quality coal.