China’s steel demand shifts to higher-grade ore, Rio Tinto exec says
"The demand for high grade ore continues to be strong," chief commercial officer Bold Baatar said.
Queensland’s bigger-than-expected hike in coal royalties could embolden other Australian states and resources-heavy countries around the world to make similar moves, analysts warned on Wednesday.
Australia’s second-largest state, which aims to deliver a budget surplus by 2024-25, said on Tuesday it would increase royalties on coal production after a 10-year freeze, to capture windfall profit from rocketing coal prices.
The move promises an extra A$1.2 billion ($836 million) in 2023 financial year taxes for the state that’s home to coal mines owned by industry leaders like BHP Group, Glencore PLC, Anglo American PLC and Peabody Energy Corp.
“We had expected QLD (Queensland) to increase royalties but the magnitude of the increase & the lack of consultation with the mining industry in our opinion sets a concerning precedent, especially when many governments are looking to balance budgets post-covid,” analysts at UBS said in a note.
Resources lobbies in Queensland slammed the move, saying it would compound the tax burden on coal producers who already pay double the royalty rate in Australia’s other major coal-producing state, New South Wales (NSW).
“The cost of doing business in Queensland is already high, and further cost pressures will discourage investment, operational growth, job creation and local business spending,” Edgar Basto, President Minerals Australia at BHP, said in an emailed statement to Reuters.
While NSW left its rate unchanged, analysts said they would be keeping an eye out for the Commonwealth Budget in October to see if there were any plans to lift rates for iron ore or other miners, considering the boom most commodities saw recently in the wake of the Russia-Ukraine conflict.
“While NSW did not follow the Queensland government’s decision to hike royalties, record-high commodity prices and ongoing budget deficits could pressure other governments to raise mining taxes,” Australian brokerage firm Barrenjoey said.
UBS also flagged the risk of other mining countries like Chile, Peru, Canada and Zambia raising taxes over the next two years after Queensland’s move.
Chile, a major copper producer, is already set to push forward its tax reform plans that include a bill on mining royalties, while Indonesia announced plans of raising royalty tariffs on tin production earlier this week.
(By Harish Sridharan and Sameer Manekar; Editing by Subhranshu Sahu)
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