Qld coal producers to slash jobs further: survey

ALL Queensland coal producers expect to cut costs and reduce employment at their mines in response to the increase in coal royalties announced in the recent state budget, according to a survey of Queensland's coal company chief executives.
Qld coal producers to slash jobs further: survey Qld coal producers to slash jobs further: survey Qld coal producers to slash jobs further: survey Qld coal producers to slash jobs further: survey Qld coal producers to slash jobs further: survey

Michael Roche

Lou Caruana

The survey by the Queensland Resources Council shows that cost-cutting measures would also include reducing contractor numbers, cutting rail and port costs and cuts to exploration expenditure.

QRC chief executive officer Michael Roche said the increased royalties came at a time when the industry was already under stress from the high Australian dollar, rising labour and materials costs and falling commodity prices.

“Our CEOs were unequivocal in saying in their survey responses that the royalty increase would considerably influence the economics of proposed new coal projects,” he said.

“The combination of 30 per cent company income tax and the new royalty rates will mean Queensland will carry an effective taxation rate of 50 per cent on a typical coking coal operation.

“This gives us the dubious honour of being the highest taxing coal jurisdiction globally.

“This effective royalty rate will increase each year if the coal royalty thresholds are not indexed.

“In the absence of coal royalty thresholds being indexed, the resultant bracket creep will mean that the government's promise not to increase royalties again for 10 years cannot be delivered.”

Roche said he hoped the Queensland government would give serious and prompt consideration to QRC's submission calling for indexation of coal royalty thresholds.

“While the current difficulties for the industry are part of the normal cycle, albeit exacerbated by a stubbornly high Australian dollar, issues such as increasing royalties and threats of further federal taxation increases do nothing to encourage continued investment in Australia's resources sector,” he said.

“Our industry is already placed very high on the global cost curve.”

Roche said his members had welcomed the establishment by the government of the Resources Cabinet Committee, under the chairmanship of Deputy Premier Jeff Seeney, with a view to addressing the former Labor government's regulatory burden legacy besetting the Queensland resources sector.

“Early indications are that the government is genuine in its determination to deliver tangible cost-reducing and productivity-boosting reforms through the new cabinet committee,” Roche said.

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