Environmental Advocacy in Central Queensland (EnvA) says BHP’s continuing campaign against Queensland’s coal royalty regime is increasingly difficult to reconcile with the company’s own actions.
For several years, BHP has argued that Queensland’s coal royalties make investment in the state uneconomic. The company has blamed the royalty regime for job losses, indicated that it will no longer invest in Queensland coal and reduced support for its FutureFit training program in Mackay.
Yet, at the same time, BHP continues to seek and secure approvals for the expansion and continuation of its Queensland coal operations through its BHP Mitsubishi Alliance (BMA).
BMA has recently secured approval for the Saraji East project and continues to progress the Saraji Grevillea Pit Continuation Project. It also has the Peak Downs Mine Continuation Project before the Australian Government.
EnvA Director Dr Coral Rowston said the contradiction raised serious questions about BHP’s repeated claims that Queensland’s royalty system had destroyed the investment case for coal mining.
“If Queensland is such an impossible place for BHP to invest, why does the company continue to seek approvals that preserve its ability to expand and continue mining in Queensland?” Dr Rowston said.
“BHP cannot have it both ways. It cannot tell Queenslanders that the state’s royalty regime makes coal mining uneconomic while continuing to secure approvals for new and expanded coal operations.”
Queensland’s royalty system is not a flat 40 per cent tax
Much of the public debate about Queensland’s coal royalties has focused on the headline 40% top marginal rate.
This can create the misleading impression that a mining company pays 40% royalty on the entire value of its coal once prices exceed $300 per tonne.
That is not how Queensland’s system operates.
Queensland has a progressive royalty structure, meaning higher rates apply only to the portion of the coal price above each threshold. Under the current system, the first $100 per tonne is subject to a 7% royalty, the next $50 is subject to 12.5%, the next $25 to 15%, and progressively higher marginal rates apply only as coal market prices increase.[1]
At prices above $300 per tonne, only the portion above $300 attracts the 40% marginal rate.
“The repeated focus on a 40% royalty rate without explaining that it is a marginal rate can give a misleading impression of how the system operates,” Dr Rowston said.
“The effective royalty rate is significantly lower than the headline top rate because different portions of the coal price are taxed at different rates.”
Royalties are, fundamentally, payments made for the right to extract publicly owned resources.
Queensland Revenue Office states that mineral and petroleum royalty payments are made to the owner of resources for the right to extract them, with royalty generally paid to the Queensland Government.
“These are not BHP’s resources,” Dr Rowston said.
“They belong to the people of Queensland and Australia. Mining companies make substantial profits from extracting a finite public resource, and Queenslanders are entitled to receive a fair return.”
Jobs and communities should not be bargaining chips
BHP’s campaign against royalties has had real consequences for workers and Central Queensland communities.
In September 2025, BMA announced approximately 750 job cuts across its Queensland operations and said it would place the Saraji South mine into care and maintenance. Reports at the time indicated that around 72 jobs at Saraji South were affected, while the broader cuts extended across the company’s coal, rail and port operations.
BHP cited Queensland royalties and weak market conditions as factors in the decision.
EnvA does not dismiss the genuine economic pressures facing individual mines. Coal prices fluctuate, operating costs rise and individual mining areas can become less profitable.
However, those commercial realities should not be simplified into a political argument that Queensland’s royalty system alone is responsible for every decision to cut jobs, close operations or delay investment.
“Workers and regional communities deserve honesty about why companies make commercial decisions,” Dr Rowston said.
“They should not become bargaining chips in a campaign by a multinational mining company to pressure governments into reducing the public return from Queensland’s resources.”
Approvals preserve BHP’s options
The decision to place Saraji South into care and maintenance makes BHP’s pursuit of further approvals particularly notable.
BHP has not simply walked away from Queensland coal. Its regulatory material continues to include the proposed Saraji East Mining Lease Project, the Saraji Grevillea Pit Continuation Project and the Peak Downs Mine Continuation Project.
An approval does not necessarily mean that a project will proceed immediately, or at all. Mining companies make development decisions according to a range of factors, including commodity prices, operating costs, global demand and corporate strategy.
But securing approvals preserves future options.
That is why EnvA believes BHP’s continued pursuit of approvals sits uneasily beside claims that Queensland’s royalty regime has made future investment impossible.
“Perhaps the real question is not whether BHP will invest in Queensland,” Dr Rowston said.
“The question is whether BHP is attempting to use its investment decisions as leverage to force Queenslanders to accept a lower return for the extraction of their own resources.”
Queensland should not be pressured into giving away its publicly owned resources more cheaply simply because a multinational corporation threatens to take its investment elsewhere.
Mining companies are entitled to make commercial decisions about where and when they invest. Governments are entitled to set royalty systems that ensure the public receives a fair share of the value generated from publicly owned resources.
But Queenslanders deserve an honest debate.
That debate must recognise that the state’s coal royalty system is progressive, that royalties rise when coal prices rise, and that the highest headline rate is not applied to every dollar earned from coal.
Most importantly, Queensland should not accept the false choice between supporting mining communities and ensuring the public receives a fair return from its resources.
Queensland can expect responsible companies to invest in communities, provide secure employment and operate transparently — while also expecting those companies to pay a fair price for the resources they extract.
“BHP should stop threatening Queensland and start having an honest conversation about the real economics of its mining operations.”
EnvA - CQ 