Queensland Resources Council CEO Michael Roche said in a report for the December quarter this morning that Wood Mackenzie’s analysis revealed that a third of Queensland’s coal mines were not earning enough revenue to cover their cash costs.
Drilling down further into the data, more than half of Queensland’s thermal coal mines that produce coal for power generation, and one in four of the state’s metallurgical coal mines that produce coal for steel making are not covering their cash costs.
Added to this, including LNG, the state’s resources sector has lost 21,000 jobs over the past two years, and Roche says more will come this year.
Lock the Gate, however, saw Wood Mackenzie’s report as reflecting the urgent need for diversification of the state’s economy to better support agriculture and renewable energy.
LTG spokesperson Drew Hutton said it was “absurd” that the industry was now “crying poor” after coming off the greatest boom in recent history during which they made billions.
“The industry is inherently cyclical and there is no case for industry relief. The industry should have been prepared for the inevitable downturn,” he said.
"Mining is a long-term business and it obviously did a very poor job in managing its cashflow.
“The Queensland government must resist subsidising mining and rewarding them for poorly managing their businesses. There is another approach to securing jobs that the government should consider.
“All companies are meant to have financial provisions on their books to pay for mine rehabilitation. Having neglected investment in rehabilitation during the boom, now is the time to start drawing down on those provisions to make good on their commitments to environmental protection by investing in large scale rehabilitation.
“The best way to secure jobs in the sector is for companies to start drawing down on their rehabilitation deficit.”
Hutton called on the government to audit the industry’s rehabilitation performance and start “rigorously” enforcing their environmental conditions which, combined with the company’s provisions, should stimulate investment in regional Queensland in mine rehabilitation.
“If the industry is serious about protecting jobs it should step up and draw down on the rehabilitation provisions which will keep people in work and start to address the massive mine rehabilitation deficit that exists in Queensland,” he said.
“The vested interests of the coal industry keep putting out their hand for a taxpayer bailout, ripping money out of the budget for schools and hospitals.
“Enough is enough. The government needs an urgent plan for how Queensland will diversify and restructure its economy towards the industries of the future, including training and support so workers can secure jobs fit for the realities of the modern economy.
“In the meantime, companies must start investing in fixing up the mess left by large-scale, open cut mining.”
Encouragingly for the industry, Roche said premier Annastacia Palaszczuk had agreed to a special meeting of her Cabinet Jobs Committee with a QRC delegation which wants to explore how the government can “ease the burden of state-imposed or sanctioned costs”
“We will want to talk with the Cabinet committee, for example, about what can be done about some of the rampant increases in local government rates for many mining and gas operations,” Roche said.
“While a commitment to no increase in royalties in this current Parliament is welcome, in reality we need to be having a conversation about the fact that the state government is collecting royalties from resource operations which aren’t even covering their cash costs.
“Similarly, government and private sector service providers of rail, port, water and energy services need to be coming to the table to discuss how they could be working with their customers to get through this very difficult part of the cycle.
“Government also has to seriously re-think proposals for additional regulation flowing from reviews of long distance commuting (FIFO) arrangements and of the mining industry safety and health legislation.”
