BHP has blamed Queensland’s royalty scheme for its decision to pause new coal investments in the state.

BHP has paused coal investments in Queensland, including its planned investment in the proposed Blackwater South mine in central Queensland. 

The Queensland Government announced a new coal royalty regime in its 2022/23 budget in June.

Royalties had been capped at 15 per cent for prices above $150 a tonne, but from July it was split into a new tiered system - 20 per cent for prices above $175 a tonne, 30 per cent for prices above $225 a tonne and 40 per cent for prices above $300 a tonne.

Treasurer Cameron Dick said high coal prices at the time were the main reason behind the royalty changes.

But BHP chief executive Mike Henry has criticised Queensland’s “quite sudden” changes to its royalty scheme.

“[It] didn't involve any engagement with industry which has been a significant increase in the sovereign risk associated with Queensland, which has caused us to say we really can't deploy further capital into that business for the time being and we'll go back and reassess what the plans for the business are going forward,” Mr Henry said.

He said that the royalty changes, and the long-term outlook for metallurgical coal, could lead to other mine sites closing earlier than “previously anticipated”.

Mr Dick has defended the royalties regime, saying coal is “delivering to BHP and its shareholders” revenue of about $22.1 billion.

“Queensland's coal industry is in good health … with strong profits being made,” Mr Dick said.

“And I do not begrudge these companies their windfall profits.

“They are entitled to reap their fair share, just as the people of Queensland are entitled to reap their fair share as well.”

The Blackwater South project was part way through its approvals process when BHP's investment was paused.

The company said the project was to create 750 construction jobs and 1,200 operation jobs at the open-cut metallurgical mine, as well as extracting 10 million tonnes of coal for steelmaking every year.

Mr Dick noted that “BHP's own documentation demonstrates … [Blackwater South] would not commence until 2029 at the earliest.

“So, a financial investment decision is many years away.

“And I can also confirm … that the Office of Queensland's Coordinator-General has confirmed with BHP that they are proceeding with regulatory approvals for that mine at pace.

“Whatever decision BHP makes in relation to that project, it must be viewed in the context of BHP's 20-year process of withdrawing from coal.”