A coal mine in Queensland, Australia. Credit: Jason Benz Bennee/Shutterstock.com.

The Australian state of Queensland has warned mining giant BHP that its mining licences could be at risk if the company does not continue to invest in the state.

Queensland treasurer and minister for trade and investment Cameron Dick stated that the state government will revoke mining tenures. The statement came in light of BHP’s statement on the three-tiered coal royalties that were introduced last year by the government.

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Though the new royalty regime has earned the state billions of dollars in extra revenue, several mining companies have warned against it stating that such a regime could deter further investment in the state.

The miner noted that the royalty regime has the highest mining taxes in the world and that it would not invest in the state as there are better options and lower risks elsewhere.

BHP CEO Mike Henry was quoted by Sky News as saying: “If returns come down because of a higher fiscal regime or higher royalty regime, and at the same time risk goes up, that impedes the attractiveness of those investments relative to other options elsewhere.”

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In the year ended 30 June 2023, BHP reported a 37% drop in its underlying attributable profit in the backdrop of lower commodity prices.

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On the other hand, the Queensland government notes that it wants resource companies to be successful, but it wants them to properly develop the leases that have been granted by the state.

If those obligations are not met, financial penalties could be imposed or even the leases could be cancelled.