New coal royalty ruled out by QLD premier

Queensland Premier Campbell Newman assured BHP Billiton’s Queensland’s coal industry will not be inflicted with another royalty rise and pledged a more secure royalty framework.

The SMH said the pledge came as Newman open the Daunia coking coalmine near Moranbah on Wednesday. The mine is the seventh under the BHP and Mitsubishi alliance.

Newman faced backlash from miners and the Federal government in 2012 when he moved to increase coal royalties The Queensland Resources Council said the state government’s royalty increase “could be the final straw” for the sector.

QRC CEO Michael Roche warned new royalty rates could result in more job losses and mine closures.

The Federal Government warned it will cut infrastructure funding for Queensland following the coal royalty hike.

The Federal government agreed to reimburse mining companies for state royalties under mining tax legislation.

Companies like Xstrata warned more than 30 per cent of Australian coalmines were not making profit.

Newman ruled out further royalty hikes at the Daunia opening.

“We didn’t like to do it, there won’t be any further changes and we are certainly trying to give people some [cost] offsets elsewhere,” he said.

“We are doing everything we can to put on the table regulatory reform that will mean mines can find operating cost savings.”

Coking coal prices stood at $US147 a tonne this week. That is down from $US220 a tonne 14 months ago.

That resulted in BHP’s coal division to record an underlying loss for the first half of the 2013 fiscal year.

Severe cost cuts and ramping up of production meant the company could report a $US746 million full-year profit.

“We have been suffering…because of the very high cost of contractors, high cost of commodities and high cost of operations,” Mitsubishi executive Kanji Nishiura said.

“We have to say goodbye to the past of high-cost operations.”

BHP's coal president Dean Dalla Valle said coking coal continues to have long-term demand even with slim margins.

Rio Tinto announced it would cut jobs from its coal mines in Queensland last year after the state hiked royalty rates.

A survey showed coal companies in Queensland were looking to cut jobs and costs following the coal royalty hikes.

The survey said 77 per cent, or all ten of the top producers, said “port and rail costs, labour requirements (employees and contractors) and exploration expenditure as likely areas to be reduced”.

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