Coal companies to cut jobs blaming the royalty hike

A survey reveals coal companies in Queensland are looking to cut costs and jobs after the recently announced coal royalty increase puts pressure on the sector.

A survey conducted by the Queensland Resources Council quizzed the state’s coal chief executives of the top ten producers along with three exploration companies.

The survey revealed that 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.’

The council's chief executive Michael Roche said the industry was already feeling the pressure from a high Australian dollar, rising labour and material costs and lower commodity prices, warning that the royalty hike is ‘being factored in more significantly to the planning around new projects," the ABC reported.

"The combination of 30% company income tax and the new royalty rates will mean Queensland will carry an effective taxation rate of 50% on a typical coking coal operation," he said.

"This gives us the dubious honour of being the highest taxing coal jurisdiction globally,"

"The feedback from coal companies is that the new royalties scale makes many new projects very unattractive."

QRC wants an indexation of coal royalty thresholds, predicting royalties would increase annually if the thresholds were not indexed. The council’s recent newsletter predicts without indexation, the effective royalty rate could increase from 9.7 per cent to 12.4 per cent by the time a 30-year project is completed.

The survey results come after recent job cuts in QLD’s coal industry have been blamed on the hike.
Rio Tinto has blamed the hike on job losses with a spokesperson for the company last month highlighting the issue facing the mining giant.

"These are not decisions we take lightly, jobs are being protected wherever possible and support is being provided for employees."

This was echoed by BHP which stated that "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".

Recent decisions to shelve large-scale mining projects in QLD have also been attributed to the royalty hike.

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