The Queensland Government has announced new royalty rates for Queensland coal, reflecting unprecedented pricing and revenues being collected by multinational coal companies.
Treasurer Cameron Dick said the change follows a 10-year royalty freeze for coal royalties, the longest pause in royalty arrangements in modern Queensland history.
“Multinational coal companies have enjoyed an extraordinary period of stability in Queensland’s coal royalty regime.
“However, with the freeze expiring on 30 June 2022, the existing rates do not account for the unprecedented windfall prices that coal producers are now receiving.
“Our existing coal royalty tiers were primarily designed for lower coal prices, with a top tier at $150 per tonne, with royalties charged at 15 per cent.
“However, with coal recently trading at over A$500 per tonne, our current rate structure is clearly no longer fit for purpose.”
Mr Dick said that, to reflect the new price levels being achieved, three new progressive coal tiers would be introduced on 1 July 2022.
The new rates will be 20 per cent for prices above A$175, 30 per cent for prices above A$225, and a 40 per cent tier that would apply when prices exceed A$300.
“Importantly, the higher tiers only take effect on the portion of the royalty price above the relevant price,” he said.
“For example, if coal prices are A$302 per tonne, a very high price by usual standards, the 40 per cent tier will only apply to the $2 portion.”
Mr Dick said the new royalty regime will minimise impacts on the coal industry.
“Based on export values and volumes over the past 10 years, average prices for hard coking coal – the metallurgical coal used for steelmaking – have exceeded the new tier of A$175 per tonne for only half that time, while average thermal coal prices have only exceeded A$175 in recent months, for the first time ever,” he said.
“These changes mean coal producers can rest easy knowing they will not be hit with higher royalties when prices are low and the industry is struggling.
“Importantly, during period of low prices, Queensland royalty rates will be lower than those charged in New South Wales.
But Tania Constable, Chief Executive Officer Minerals Council of Australia said the government’s announcement means mining investment and regional jobs in Queensland are at risk.
“This extraordinary 40 per cent royalty on revenue together with Australia’s 30 per cent tax on profit makes Queensland the highest taxing mining jurisdiction in the world. This is unacceptable.
“It will not only impact thousands of direct mining jobs but also thousands of small businesses and many communities that support mining.”
She said stable and internationally competitive tax regimes are critical to ensuring mining investment continues to grow and deliver further benefits for all Queenslanders.
“Australian mining consistently pays amongst the highest tax in the world including company tax, royalty receipts and payroll tax to federal, state and territory governments.
“The system works as more royalties and company tax are delivering to the people of Australia – over $39 billion in 2019-20 and will go higher.
“In the period 2010-11 to 2019-20, Australian mining paid $106 billion in royalty taxes and $132 billion in company taxes – 30 per cent of all company tax paid in that period.”