Article by Lou Caruana courtesy of Australia’s Mining Monthly.
QUEENSLAND miners are growing increasingly fearful that the state government is embarking on decisions that may impact the sovereign risk of resources projects without due consultation after it has been revealed a bill is being prepared that will allow mining project approvals to be retrospectively retracted or changed.
This move follows the Queensland government hiking coal mining royalty rates without due consultation with the mining industry, which, among other things, has resulted in BHP pausing investment plans in Queensland.
Macfarlane said the BHP’s decision to stall investment in Queensland because of the sudden increase in state government royalty taxes was unfortunately no surprise to the industry.
“This decision to halt investment in Queensland for the foreseeable future and reassess its plans for the business going forward is typical of what we warned the Queensland Treasurer would happen since he unilaterally decided to add three new tax tiers to the coal royalty system in the May budget,” he said.
“This however is not an isolated case – coal companies, large and small, are saying to us they’re going to have to put a hold on investments for now and see what happens with the state government around royalties.”
With the proposed Environmental Protection and Other Legislation Act amendments being drafted by the Queensland environment department, industry bodies have been restricted in how they can consult with their membership base because they were forced to sign a confidentiality deed by the department’s strategic policy team.
If enacted, the draft legislation will let senior bureaucrats in the state’s environment department to reverse approvals or licenses or add extra conditions to approvals.
Association of Mining and Exploration Companies CEO Warren Pearce said the process run by the environment department was “extremely disappointing and not in the spirit of a true exposure bill”.
“There was no transparency, collaboration or partnering with the resources industry, and I can’t recall a situation when a bill had been shared under this scenario,” he said.
“This continued behaviour of secrecy from government is highly concerning.”
Pearce said the EPOLA bill should undergo a full Consultation Regulatory Impact Statement process.
“The process that has been carried out to date by the department is not consistent with fundamental legislative principles, due to the extent of powers the department is giving themselves within the bill and the material impact this will have on resource developers,” he said.
“The Queensland government needs to allow agencies to work together to deliver on responsible development actions that are critical to achieving emissions reduction and renewable energy targets. Decarbonisation and renewable energy technology is dependent on responsible mining.
“It’s disappointing that the visions and actions committed to in the recently released Queensland Resources Industry Development Plan, are being compromised by the Department of Environment and Science’s unwillingness to sit at the table with the resources industry and work together to achieve practical solutions.”
Queensland environment minister Meaghan Scanlon said in a statement: “To be clear, no decision has been made by government about the final contents or introduction of any amendments to this bill.
“As with all issues, I expect my department to consult with all stakeholders, as I understand has been done here since August 2021.
“Like any proposed legislation, amendments also go through a consultation process via the parliamentary committee system, where members of the public and stakeholders can have their say, as well as being debated through parliament.”
Macfarlane described the EPOL draft process as “opaque” and warned that the government’s lack of transparency and consultation with the industry could endanger investment in exploration and mining development.
He said the Queensland government’s decision to dramatically increase coal royalty tax rates could not have come at a worse time for the exploration, minerals and energy sectors.
“This irresponsible move – made behind closed doors and without any consultation with industry – has damaged our reputation as a safe and reliable destination for investment,” he said.
Macfarlane said there was no need for the government to impose a “super tax” on coal because Queenslanders were already benefiting from higher coal prices under the previous royalty regime.
“Under the previous system, last year Queensland coal companies paid more than $7 billion in royalty taxes – which is four times as much in royalty taxes compared to the previous year,” he said.
“As commodity prices go up, so do royalties – that’s how the system worked.
“Unfortunately, the state government has now lifted rates to unprecedented levels, without consulting our industry and the consequences of that decision are now being laid bare for all to see.”
Under the government’s updated coal royalty regime, royalties paid by coal producers this financial year will rise from about $7.3 billion under the previous regime, which was almost four times higher than the previous year because of higher coal prices, to about $16 billion.
Macfarlane said the exploration industry was right to be concerned about the flow-on effect of the royalty hike on its ability to compete internationally for project capital.
“Without consistent and successful exploration, and the confidence of domestic and international investors, there is no Queensland resources industry,” he said.
“It can take years, if not decades, for exploration companies to gain approvals to explore to get minerals and commodities out of the ground and transported to customers, so maintaining long-term confidence in our sector is essential for investors to make long-term decisions.”
According to a QEC survey last year, explorer sentiment towards access to investment capital was the best in its 11-year history.