Two major mineral producers began pulling out investments in fossil fuel operations.
Glencore Australia recently abandoned its environmental application for the new $1.5 billion Valeria Coal Project, 265km west of Rockhampton.
“Glencore has decided to withdraw the Valeria coal project from the current approvals process and will place the project under review,” a spokesperson said according to Reuters.
The decision is widely expected to prematurely end studies and assessments that have continued for the past 12 months.
Former State Coordinator-General Barry Broe already declared Valeria a coordinated project, which means it requires a strict impact assessment involving whole-of-government coordination, either through a comprehensive environmental impact statement or a targeted impact assessment report.
The original proposal was to construct an open-cut operation that was capable of producing up to 20 million tonnes per annum run of mine coal with an estimated lifespan of 37 years. At least one possible infrastructure corridor includes rail, roads, electricity, water and telecommunications. A 300-bed accommodation camp was also planned.
The project could have created up to 1400 construction jobs plus a further 1250 operational positions from the year 2024.
Glencore blamed the Queensland Government’s new tiered royalty rates of up to 40 per cent once the average coal price per tonne exceeds $300.
“Abrupt decisions like the Queensland super royalty hike have damaged investor confidence, increased uncertainty and raised a red flag with key trading partners,” the spokesperson said according to the newswire agency.
The proponent also revealed plans to shut down three existing coal operations before the end of the decade.
“We will continue to progress various brownfield coal extensions at existing mines in Australia but note that within the next four years our Liddell, Newlands and Integra mines will close and undergo appropriate rehabilitation,” the spokesperson said according to the Australian Associated Press.
When asked about the shock move state Treasurer Cameron Dick claimed demand was already predicted to drop in response to “increased global uncertainty”.
“Investment decisions around mining projects are ultimately a matter for proponents,” he said according to News Limited.
“Queensland Treasury’s report on long-term global coal demand released last month makes clear that – while demand for Queensland thermal coal is set to resume its decline – demand for Queensland metallurgical coal will remain strong over coming decades.”
The Queensland Resources Council (QRC) seized on these remarks and blamed excessive revenue raising for dwindling business confidence.
“The Queensland Government does not appear to appreciate the impact of its decision to lift coal royalty taxes to the highest rates in the world,” QRC chief executive Ian Macfarlane said in a public statement.
“Short-term political decisions like this make it harder for companies to invest here and send a signal to shift their focus to other destinations that offer better returns to investors.”
Macfarlane also complained about what he called the government’s lack of consultation on coal royalties.
“Unfortunately, our concerns have fallen on deaf ears,” he said.
“We now have a situation where major mining companies such as BHP, Peabody and Glencore are rethinking their investment plans for Queensland, which means every Queenslander loses out in terms of new jobs and business opportunities and the flow-on benefits from that.”
BHP separately approved an extra US$750 million (A$1.1B) in early closure and rehabilitation funding, which is widely speculated to be used for shutting down multiple BHP Mitsubishi Alliance (BMA) coal operations. Some mine leases are set to expire sometime in the year 2043.
“The outlook for future investment in Queensland under this policy is increasingly bleak,” BMA asset president Mauro Neves said according to News Limited.
“We are unable to make significant new investments in Queensland and some mines may close earlier than planned because of the government’s increase in royalty tax rates.”
Lock the Gate Alliance welcomed both announcements as evidence of “no future” in fossil fuels.
“This shift by Glencore, and its statement that it was part of its managed design of its global coal business, is a massive signal that thermal coal is on the way out around the world,” national coordinator Carmel Flint said in a public statement.
“There are seismic shifts occurring around the globe as the race to decarbonise accelerates and even commodity giants like Glencore are not immune.”