Met Coal - the building block of a decarbonised world

Mauro Neves, BMA Asset President

The coal industry has faced a big period of change in the last few years. The environment we are operating in now is very different to where we were even five years ago. We have collectively faced challenges as an industry – a global pandemic, heightened geopolitical risk, significant disruption to supply chains, extreme weather, labour shortages and, of course, the acceleration of the energy transition.

But what we have also shown as an industry, is that we are resilient. Despite operating in an environment that is volatile, uncertain and fastpaced, we continue to meet the global demand for high-quality metallurgical coal.

All the while maintaining our commitments and investments to creating social value in communities where we operate, providing employment opportunities and building a workforce that is fit for the future.

While the coal industry is often criticised, the reality is that we cannot pave the way for a cleaner future without met coal to build renewable infrastructure, to build transmission lines, to build wind turbines, to build electrical vehicles – the list goes on.

There is no doubt there will be challenges that lay ahead, particularly with the mounting uncertainty of future investment in the state against the backdrop of the Queensland Government mining royalties increase.

As an industry, we are stepping into this space actively as we proudly own our place in the transition to a cleaner future.

However, investment attraction and a predictable tax and regulatory environment will be critical to enable the green future for Queensland coal.

The world needs steel to keep growing

It is metallurgical coal, or hard coking coal, that will hero our commodities role in a decarbonised world. At BMA, we are adapting to the changing world as we accelerate towards decarbonisation. Our product, metallurgical coal for steel making, plays an essential role in this cleaner future.

For at least the next decade, there is no economically viable and scalable substitute for metallurgical coal. Here in Queensland, our met coal is sought after for its quality and reliability.

BMA’s steelmaking coals are, on average, 58% fewer carbon emissions-intense on a delivered basis than the average global competition in the seaborne metallurgical coal market. For our customers, our high-quality coal generally decreases the amount of fuel required during the steel manufacturing process and therefore reduces total emissions.

While the coal industry is often criticised, the reality is that we cannot pave the way for a cleaner future without met coal to build renewable infrastructure, to build transmission lines, to build wind turbines, to build electrical vehicles – the list goes on.

The world is growing, cities are expanding, and infrastructure is needed. Demand for our product is part of this growth. We should be proud of our essential part in the decarbonisation story.

Beyond the resources

Our industry’s journey to decarbonisation goes beyond the resources we mine. It also extends to the way we operate. We have plans in place, and we are taking action in our operations and in partnership with suppliers in our supply chain and customers to meet our climate commitments.

To support the net zero transition across the BHP global business, our long term goal is to achieve net zero operational emissions by 2050; and to target net zero GHG emissions from all shipping of BHP products and operational GHG emissions from our direct suppliers in the same period.

Using renewable power to reduce emissions and transitioning some fleets to electrification are just some ways we are working towards reducing operational emissions as we strive to reach net zero.

Royalties and impact on future investment

BMA has a world-leading portfolio of met coal assets and we are proud of our contribution to Queensland and the sector. We’ve invested tens of billions of dollars in growing our business in this state to meet global demand, including opening two new mines and building new berths at Hay Point in the past 10 years.

While there are great opportunities for Queensland and its regional economies through the next phase of Australia’s economic development, the outlook for business in Queensland is not as positive as it once was.

The industry needs certainty and stability to secure future investment and longevity of operations across the Bowen Basin. In the Queensland mining sector, coal royalties are now three times higher at the top end because of this year’s unexpected royalty increase by the State Government.

Our planned Queensland projects and investments have now fallen well down the batting order – to the point where they may not happen at all – and that capital will go to other states and countries.

Investment decisions about future developments and operators are made many years in advance. While the impact may not be felt for a few years, it will come as companies and investors look elsewhere to invest if the price is too high and not viable.

Not only is it extremely disappointing for our industry, but it’s also devastating for the communities that rely on us. This extends to the local businesses who need our custom, regional initiatives and projects that need our investment, and the local jobs and skills that we create across the Bowen Basin.

We are TEAM QUEENSLAND

Communities are at the heart of what we do - without the support of our communities we don’t exist. As the biggest regional employer in Queensland, our own team members make up a big portion of those communities and have families that use local services and facilities.

The contribution of regional economies in building jobs, skills and opportunities for Queenslanders can be extremely powerful if they have the right infrastructure and service support.

In the last financial year, BMA spent more than $6.8 billion across Queensland to suppliers and invested over $13.72 million in social investment to support local partnerships projects in areas such as health, education, environment and indigenous engagement.

What I’m most proud of when we speak about these investments, is the real outcomes and benefits that are realised:

• the local newsagency who was able to remain open throughout COVID-19

• the families that will benefit from our action to increase childcare availability

• local businesses that are able to grow, hire locally and maintain healthy cash flow with 7-day payment terms.

These are the areas where we have a proven track record of adding value in Central Queensland. It is these areas that are most at risk if industry does not see stability in doing business in Queensland.

Our purpose is to bring people and resources together to build a better world and we hope to continue to be able to do this as part of Team Queensland. Operating in this environment requires us to be more competitive and resilient than ever, but it also presents an exciting opportunity to be at the forefront of a new pathway. Let’s keep mining strong! 