Mining giant flags more jobs at risk due to coal taxes
The chairman of Australia’s most valuable mining company says more mining jobs could be at risk if the state government refuses to tackle its unsustainable coal royalties regime.
CEO Mike Henry said that under the Queensland plan, BHP paid eight times the sum of royalties and taxes the Mitsubishi Alliance company earned on profits, resulting in calls for the Saraji South metallurgical coal mine to be scrapped.
This move, which takes place in an environment where coal prices are weakening, will lead to the layoff of approximately 750 people across the state.
“Government inaction is having real impacts on regional businesses and towns, and without change there will inevitably be more difficult decisions to be made,” Mr Henry told BHP shareholders at the group’s annual general meeting in Melbourne on Thursday.
“We pay 67 cents in taxes and royalties for every dollar, and that is simply not sustainable.”
Saraji South, which will be put into maintenance and repair in November, is among the alliance’s five steel-producing coal mines in central Queensland.
It is also one of the longest-running ones, with its activities starting in 1974.
Queensland has a tiered royalty scheme with taxes ranging from seven per cent to 40 per cent depending on the price of coal.
Prime Minister David Crisafulli has refused to change the plan introduced under the previous Labor government and has harshly criticized mining companies, branding them “fair-weather fellas” and blaming royalties as the reason for job cuts.
BHP, Australia’s second-largest public company by market value, is also in the process of closing its Mt Arthur thermal coal mine in NSW, where the concession rate for strip mining has reached 10.8 per cent.
Chairman Ross McEwan said the decision on Mt Arthur was final but depending on profitability some projects could be restarted after being shelved.
“We can take them into maintenance; if pricing changes they can be opened at a later stage, or we can find different ways to use these resources and make them economical,” he told shareholders.
Responding to a question about the five per cent cash flow tax proposed by the Productivity Commission, Mr McEwan noted that the capital intensity of mining meant projects often required significant upfront investment and decades to deliver a return.
“We need to remain competitive to attract investment to Australia,” he said.
“And even at the current corporate tax rate, we are probably one of the most expensive corporate tax rates in the developed world.”
The Productivity Commission also recommended reducing Australia’s corporate tax rate from 30 per cent to 20 per cent.
Mr McEwan was tight-lipped about recent reports that steelmakers in China were blocking shipments of certain BHP iron ore products, dismissing them as routine labor disputes.
“We’ve had relationships in China for decades and a pretty good working relationship, but this is an ongoing commercial negotiation, as it is every year,” Mr McEwan said.
“There is very little I can say about this. We are having a commercial meeting and will not comment on any details.”
BHP’s share price fell nearly 2.1 percent to $42.58 in the afternoon.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
