Global Mining CEO Says Chile Easier to Deal With Than the Queensland Government

BHP halting investment in the Australian state

The company logo adorns the side of the BHP gobal headquarters in Melbourne, Australia on Feb. 21, 2023. (William West/AFP via Getty Images)

BHP CEO Mike Henry has continued pressuring the debt-heavy Queensland Labor government over its contentious decision to raise mining royalties in the coal-rich state.

Henry reiterated that recent policies from the state (and federal) government would compel the global mining giant to pull investment from the region, despite major opportunities in critical mineral mining.

“Capital is global. It will flow to where the risk/returns ratio is most attractive. Where governments act unpredictably and unreasonably, they increase risk for investment,” he told the World Mining Congress in Brisbane on June 27.

“In Chile, there was a push to raise copper royalties. Notwithstanding a government for the strong left, they engaged industry and sought to understand and work towards an outcome that struck a balance between public needs and what was required to keep industry and the country competitive,” Henry said.

The CEO called the process “respectful” and collaborative, noting that BHP would continue investing in the South American country.

“By way of contrast, and it saddens me to have to say this on this stage and in this place, but I think we owe it to our host state and to this audience, to be honest—here in Queensland, the approach to raising royalties could not have been more different. No industry engagement, no effort to understand, and no interest in understanding,” he said.

“The near tripling of top-end royalties makes Queensland the highest coal taxing regime in the world. I repeat, the highest coal taxing regime for mining in the world.”

Henry also criticised the federal Labor government’s recent changes to workplace laws, including the multi-employer bargaining, and Same Job Same Pay laws.

The latter means businesses will need to pay contractors the same rates and benefits as full-time workers—BHP has previously complained that the move will cost the company $1.3 billion (US$850 million) per year.

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Despite the frustration, Queensland Premier Annastacia Palaszczuk, who spoke prior to Henry, announced a swathe of initiatives to try to position the state as a “global leader” in critical mineral mining.

“The critical minerals strategy lays out the blueprint to mine and process the minerals and to manufacture the renewable technologies right here in Queensland,” she said.

The Labor government will invest $55 million into providing free rent for new and existing exploration permits for the next five years, and $75 million to support critical minerals projects in certain areas, beginning with Julia Creek-Richmond and around Mt Isa.

The government will also establish a $100 million Critical Minerals and Battery Fund.

Labor’s Contentious Mining Tax Hike

The Queensland government last year raised mining royalties amid rising public spending.

“We need to make sure that we look at those multinational companies, looking at those super profits they’re making, and some of that money that’s owned by every single Queenslander—bringing that back to our communities to provide for our schools and our hospitals,” Queensland Treasurer Cameron Dick said last year.

From July 1, 2022, the state government began charging a 20 percent tax on each tonne of coal sold for more than $175; 30 percent for prices above $225 a tonne; and 40 percent for prices above $300 per tonne.

Queensland’s previous coal royalty tax was a flat rate of 15 percent per tonne, in New South Wales and Western Australia, coal royalties are under 10 percent. The move was even poorly received by the Japanese government.

This year, the royalty scheme has helped pad the state’s finances, resulting in a $12.3 billion (US$8.3 billion) budget surplus over the 2022-23 financial year.

Yet the Budget Papers show net debt will still reach $47 billion by 2026-27 amid infrastructure spending for the Olympics and a ballooning public service with another 4,666 positions added (Labor has bolstered the public service by 20 percent since winning office in 2015).