Bowen Coking Coal says the Queensland Revenue Office (QRO) has turned down a proposal to defer payments for the state’s heightened royalty scheme introduced under Labor in 2022.
Ten days ago, the company revealed that the Indonesian contracting company which formerly worked its Burton mine in Queensland, BUMA, had demanded payment of over $15 million, and said that combined with the state’s larger mining tax obligations were putting pressure on Bowen.
Bowen said it was “disappointed” with the QRO’s decision but proposed submitting a revised proposal “as soon as practicable,” according to an investor announcement.
Prices for metallurgical coal, used in steelmaking, have steadily declined over the past year as Chinese plants, the world’s largest, have reduced production in response to a sluggish economy and lower demand.
In June, the ASX suspended trading in Bowen’s shares after the company warned that “depressed global coal prices and the unsustainable Queensland state royalty regime” had led to a worsening of its financial position.
Trading had only recommenced in mid-July, at which time the company also announced it was cutting production at the Burton site, which it acquired in 2022.
“While it is difficult to forecast prices, Bowen is optimistic of metallurgical coal price increases in the medium term when the Indian monsoon season draws to a close and the seasonal restocking process for steel mills commences,” it said in a statement.
Bowen management have met with the current LNP government, but returning the mining tax rates back to the previous rate seem unlikely given the parlous state of Queensland’s finances.
From July 1, 2022, the then-Labor 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.
Creditor’s Demand Adds to Woes
Meanwhile, the QRO’s decision casts more doubt on Bowen’s future.BUMA has now lodged a creditor’s statutory demand for $6.82 million, which must be paid by Aug. 4 if it is to avoid insolvency. The letter of demand, delivered after the market closed on July 14, sent the miner’s share price tumbling 25 percent to $0.075.
A few days earlier, the company had stated that it was in the midst of ongoing cash conservation measures, including halving its operating excavator fleets and reducing production targets for the September quarter to approximately 500,000 tonnes of coal, prioritising only low-cost export tonnage.
Bowen didn’t renew BUMA’s contract when it expired on July 1, instead announcing that the Burton mine would henceforth be owner-operated, which it said would enable it to “deliver greater consistency in performance, improve alignment across all aspects of Burton operations, and provide new opportunities for our workforce, strategic partners, and the local community.”
At the time, Bowen’s CEO, Daryl Edwards, called the decision “amicable.”
Queensland’s coal exports decreased by $8.6 billion in the year to November 2024, according to the Queensland Government Statistician’s Office. Despite this decrease, the mineral fuels and lubricants commodity group (which includes coal) still represented the state’s largest export earner, with sales totalling $55.7 billion.
However, the value of coal exports is forecast to fall to $41 billion in 2025/26, according to the Department of Industry, Science and Resources.
This is a developing story and will be updated as new information becomes available.
