Free coal contest: royalty subsidies to Queensland coal mines

Mineral industries Coal Industry assistance New South Wales Queensland
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Queensland’s Government is currently brokering a deal with Adani on coal royalties, slated for completion by the end of September. Little is known about this deal other than it is almost certainly likely to reduce and defer Adani’s royalty payments, effectively lending Adani money on subsidised terms that no other Queenslander or Queensland business can access. This breaks an election promise not to subsidise the controversial project.

Separately, Queensland’s major political parties have both declared a ‘freeze’ on coal royalties. The Government’s freeze would be four years, the Opposition’s 10 years. Instead the Government is asking for voluntary payments. The requested payments are so small they would make up only 5% of the last state budget’s disaster costs.

The last increase to coal royalties took place under the Newman Government, but affected almost exclusively high-value coking coal mines. Following the Newman Government changes, Queensland’s royalty rate is ‘progressive’; the first $100 per tonne attracts a 7% royalty rate, from $100 to $150 per tonne it attracts a 12.5% royalty, and beyond $150 per tonne it attracts a 15% royalty.

The Queensland royalty rate on lower value coal has not been updated for more than two decades. It is 17% lower than the rate in NSW for coal mined from open cut mines This equates to a 17% discount per tonne in Queensland for coal valued at under $100 per tonne and some discount on any coal valued up to $128 per tonne.

The average thermal coal price has fluctuated between $70 and $130 per tonne in the last two years, meaning a royalty discount for almost every tonne exported from Queensland. For 2/3rds of this period it has been under $100 per tonne, giving the maximum discount.

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