The resources industry powers on

Ian Macfarlane, Chief Executive, Queensland Resources Council

The resources industry powers on, contributing despite every challenge.

As the world transitions over the coming decades, our thermal coal will be needed to keep the lights on and industries running here and around the world, as well as help lift millions of people out of poverty in developing nations.

It is my great pleasure to again provide a contribution to the Bowen Basin Mining Club’s Yearbook.

The BBMC represents a region that is integral to Queensland’s resources sector, making an extraordinary social and economic contribution to many local communities and to our state.

After barely skipping a beat to power the Queensland and national economies through the two years of COVID-19 shutdowns, the resources sector is again underpinning our economic resilience in the face of global headwinds.

2022 has been a remarkable year for Queensland resources, particularly coal and gas.

Record global demand for our coal has driven record prices as Queensland producers contribute to the energy and steelmaking needs of our trading partners around the world. Despite years of predictions from activists that ‘the end is nigh’ for coal, it is clear that Queensland coal will remain in demand for a long time to come.

And that means many more years of coal contributing to the ongoing strength of Queensland’s resources sector and underpinning the state and national economies through the challenges ahead.

Economic contribution

As demand for our resources grows, the sector’s contribution to jobs and the economy in Queensland has hit new highs. The Queensland Resources Council has just released its annual Economic Contribution report, which again reinforced how crucial the sector is to the state’s economic security.

The headline figures from the 2021/22 financial year tell the story.

Queensland’s resources and energy sector contributed a record $94.6 billion to the state’s economy, and directly and indirectly supports the jobs of almost 451,000 Queenslanders.

That equates to one in every four dollars spent, (an increase from one in every five dollars spent last financial year), and one in every six jobs is supported by the resources sector.

Not surprisingly, coal is the biggest contributor. More than 46,000 people are directly employed in the coal sector, an increase of 34% on last year. That number reaches over 319,000 when indirect jobs are included, a rise of 9%.

Resources companies spent $27 billion supporting more than 14,300 businesses and 1,415 local sports clubs and charities. That’s a terrific record of which the resources sector can be justifiably proud.

In 2021/22, coal delivered the Queensland Government a staggering $7.3 billion in royalties, which was $5 billion above what Treasury had originally forecast and budgeted for. Those royalties enable the government to pay for the hospitals, schools, doctors, teachers and police officers and all the essential services Queenslanders rely on.

When gas and metals are included, the total royalties collected by the Queensland Government was a record $9 billion. Under the Queensland Government’s new royalty regime, which was introduced without consultation or warning, the coal royalty tax rate more than doubled overnight to be the highest in the world.

This financial year, coal producers are forecast to pay $12.4 billion in state royalties, an extraordinary amount of money to rip out of an industry that is so important to Queensland. It’s well above the $800 million royalty increase forecast by Queensland Treasury in the June state budget.

As a result, we’ve seen a major trading partner like Japan question its future investment in this state, as have companies as significant as BHP and Peabody Energy.

You can be sure they won’t be the last, and the implications go well beyond coal producers. The increase in state royalties is impacting the entire Queensland resources sector, including our emerging critical minerals industry.

It is regional areas that will be hardest hit when projects are cancelled and potentially thousands of jobs are lost.

It’s why the Queensland Resources Council is campaigning so hard on this issue and calling on the state government to reconsider the royalty increase and to properly consult with industry.

Previously, in what is a very competitive global market, a stable state government and consistent policy have always been key selling points in attracting investors to Queensland to maintain a long-term pipeline of projects in this state.

That reputation is now under serious threat because of this government’s ill-considered decision, which is being talked about in boardrooms around the world, and the QRC won’t be letting up in voicing our strong opposition.

The prospect of a new federal mining tax on coal and gas is another serious threat to future investment in Australia's resources sector. The tax has been proposed as part of a misguided government strategy to lower energy prices for families and businesses.

We all want to see lower power bills, but it will not be achieved by introducing a new tax. It would only jeopardise new investment to boost supply, which is a key part of the long-term solution to bring down energy costs.

That's why the QRC has partnered with our interstate and national counterpart bodies on a campaign to ensure the federal government is aware of the industry’s strong opposition to a new tax because it is a threat to jobs and future investment.

Supporting regional communities

The QRC also recently released its Local Content report, which measures the commitment of resources companies operating in Queensland to support local businesses and service providers.

In 2020-21, resources companies spent $27.7 billion purchasing goods and services locally, which was a record 82% of their procurement budgets. This is up $1 billion on the previous year, which is great news for regional communities across the state.

It’s not just the businesses involved in providing and servicing the big mining equipment that benefit and rely on a vibrant resources sector. The benefits flow all the way through to the local food stores and other shops that supply products to mine sites.

Encouragingly, nearly half of resources companies say they intend to increase their local spend over the next 12 months.

New technologies

2022 saw a change in the federal government and the appointment of a new Resources Minister, Madeleine King. It was encouraging to hear the Minister acknowledge from the outset the importance of the resources sector to the government achieving its net zero ambitions.

The metallurgical coal that comes out of the Bowen Basin will be vital to building the current and emerging technologies for low-emission energy generation. The Queensland resources sector has a very good story to tell when it comes to investment in technologies that reduce its own emissions and improve energy efficiency.

In their own operations, QRC members are already working to lower emissions and reduce energy costs by improving energy efficiency, adopting renewable energy, investing in co-generation and implementing demand management. QRC supports the ongoing efforts of members as they seek to decarbonise their operations.

From onsite wind and solar farms to incidental methane and coal seam gas capture and electrification, mines across the Basin are looking at every option and technology to reduce their carbon footprint. It takes time, money, community support and government co-operation but our resources sector is proving its commitment to cleaner energy.

As the world transitions over the coming decades, our thermal coal will be needed to keep the lights on and industries running here and around the world, as well as help lift millions of people out of poverty in developing nations.