BHP chief warns race for green metals needs more than subsidy ‘sugar hit’

In particular, it has fired warnings over abrupt royalty hikes, the introduction of new reservation schemes forcing miners to hold back some of their exports to sell to domestic market only, and the federal government’s proposed industrial relations changes, including allowing multi-employer bargaining and the “same job, same pay” legislation, which will require employers to pay labour hire workers at least the same pay as direct employees doing the same job.

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On Tuesday, Henry said BHP would not invest any more growth capital in Queensland, where the Palaszczuk state government did not consult the mining industry before nearly tripling the top end of its coal royalties to become the “highest-taxing regime for mining in the world”.

The Queensland state budget last year lifted a decade-long royalty freeze on every tonne of coal – a move the government said would ensure the public received a fairer share of the “super profits” flowing in the sector as a result of the war in Ukraine worsening global shortages of the fossil fuel and sending prices to all-time highs. However, the decision has angered the mining industry in the state, which ranks as the world’s top exporter of metallurgical coal used in steel-making.

“Both the outcome and the process have meant for BHP that we have opportunities to invest for better returns and lower risk elsewhere in the world,” he said. “We will not be investing any further growth dollars in Queensland under the current conditions.”

Queensland Premier Annastacia Palaszczuk, who unveiled the state’s critical minerals strategy, appeared unfazed by BHP’s comments, saying there were plenty of other investors willing to spend in the state.

Globally, Australia ranks among the top three countries by share of known reserves for copper, cobalt, lithium and nickel. However, local miners will need to secure billions of dollars to develop critical minerals mines and processing facilities if the country wants to seize a bigger share of the value chain.

BHP earns most of its revenue from selling iron ore and coal to the steelmaking industry, which accounts for up to 8 per cent of the world’s output of planet-warming carbon dioxide emissions. But the company is seeking to significantly boost its supplies of what it terms “future-facing” commodities, such as copper and nickel, both of which stand to benefit from the accelerating international efforts to decarbonise. Electric cars consume up to four times as much copper as internal combustion-engine vehicles, BHP says, while nickel is a necessary ingredient in lithium-ion batteries.

BHP estimates the world will need an additional $US100 billion a year in capital investment in the resources sector to get on track to meet the Paris Agreement’s goal of limiting the world’s temperature rise to 1.5 degrees above pre-Industrial Revolution levels, calling for twice as much copper and four times as much nickel.

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