BHP Group has announced plans to suspend operations at its Saraji South coking coal mine in Queensland and cut 750 jobs across its Queensland coal operations.
The mining giant attributed the decision to persistently low coal prices combined with high royalties imposed by the Queensland state government, which have significantly eroded returns.
The Saraji South mine, part of the Saraji Mine Complex shared with Mitsubishi Development (a unit of Mitsubishi Corp), will enter care and maintenance beginning November 2025.
The job cuts represent a substantial workforce reduction affecting direct employees, contractors, and service providers linked to BHP’s coking coal operations in Queensland.
While about 72 workers will be directly affected at Saraji South, the majority of the 750 jobs removed are spread across the entire BHP Mitsubishi Alliance (BMA) operations in the state.
The Saraji complex produced approximately 8.2 million metric tonnes of metallurgical coal in the fiscal year ending June 2025.
Queensland’s coal royalty regime, introduced in 2022 during a coal price boom, is widely recognised as the highest in the world.
The royalty system imposes progressive rates that escalate with coal price benchmarks — starting at 20 per cent for prices above $175 per tonne and rising to 30 per cent above $225 per tonne, with top rates reaching 40 per cent or more when prices exceed $300 per tonne.
According to BHP, this has resulted in a royalty and government payment burden amounting to approximately eight times the net profit the company made from Queensland coal operations over a recent period.
The impact of these royalties has drastically reduced BHP’s return on capital employed in this sector to as low as 1 per cent.
The company further cited weakening global demand and coal price declines as compounding factors.
Steelmaking coal prices have dropped roughly 40 per cent since the start of the previous year, affected by softer demand in Europe and parts of Asia, despite some supply disruptions in eastern Australia.
These market conditions make maintaining operations in lower-margin parts of the mine footprint unsustainable.
Beyond the operational suspension at Saraji South, BHP has also announced a strategic review of its FutureFit Academy in Mackay, Queensland — a major training centre that supports workforce development for the mining industry.
This is part of a broader cost-cutting effort by the miner amidst challenging economic conditions for coal producers in Queensland.
The announcement has drawn urgent calls from industry groups for government intervention. Janette Hewson, Chief Executive Officer of the Queensland Resources Council (QRC), stressed the importance of reforming the coal royalty system to safeguard jobs and the state’s economy.
“We feel for the workers, families and communities impacted by the announcement, particularly those in the regions,” Hewson said.
She added: “QRC warned the previous Labor Government about the consequences of introducing the world’s highest coal royalty rates.
“We have continued to raise industry’s concerns with the LNP Government. However, by accepting bad policy, they have cost jobs for Queenslanders.”
Hewson explained that the “impact of the royalty tax increase coupled with a drop in coal prices and soaring production costs is simply making it unviable for many coal producers in Queensland to continue operating’.
She highlighted the risk this poses to Queensland’s reputation as a stable place for investment and reiterated QRC’s offer to collaborate with the government on a balanced coal royalty framework that would protect jobs and encourage investment.
“Queensland can’t afford to continue with a bad policy that will cost more jobs and weaken our state’s economy,” she concluded.
The saga at BHP underscores the broader pressures facing Queensland’s coal industry amid high state royalties and volatile global markets.
While demand for Queensland’s steelmaking coal remains strong in the medium term, the current fiscal environment is forcing major producers to make tough decisions on operations and employment.
BHP’s Saraji South suspension and job cuts highlight how regulatory costs and market conditions intersect to shape the future of mining investments in Queensland, with potential ripple effects for communities reliant on the sector.
The government’s response to calls for royalty reform will likely be critical to the sector’s ongoing viability and regional economic stability.
