Thank you for the introduction and the opportunity to be here tonight.
I’d like to start by acknowledging the Traditional Owners of the land we meet today. Here in Mackay, I am on the custodial lands of the Yuwi people. And I pay my respects to their Elders, past and present and to emerging leaders.
It’s a real pleasure to be here tonight, celebrating the achievements of so many talented individuals, teams and leaders in our industry.
I’m Adam Lancey, Asset President for the BHP Mitsubishi Alliance or BMA.
I’d like to congratulate the most important people in the room tonight, and they are our award nominees and finalists, let’s give them a round of applause.
Regardless of the results tonight, being nominated at the awards is a huge achievement and each of you have demonstrated a tremendous contribution to the resources sector.
Finally I’d like to thank everyone here tonight.
This is my first chance to speak to this audience and I believe it’s come at an important time for our industry.
I will speak more about this shortly but first I want to share a little more about myself and how I’ve come to lead the BMA team.
I joined BMA late last year; however I’ve been with BHP for over 23 years.
I recognise I’m probably in a room of Queensland Maroons fans so don’t hold this against me but I’ve spent most of my career in the NSW Hunter Valley at BHP’s Mt Arthur Coal Mine I’m also a very proud Blues fan if you didn’t know.
BHP announced plans to close Mt Arthur Coal in 2022 and I thought I’d be there to close the gates in 2030.
But when an opportunity to lead one of the world’s largest producers of seaborne metallurgical coal came up – it’s not something you turn down.
Not only is the Queensland mining industry a passionate, tightknit community, it’s also a powerhouse on the world’s stage of mineral producing regions. From met coal to copper, our industry remains essential to the future as the world seeks to solve some of its greatest challenges.
As our world evolves so does the role of the resources industry.
Tonight, I wanted to touch on a couple of things.
I’ll particularly reflect on how Queensland has become one of the biggest global players in the resources arena and then talk to the great opportunity on the table if we are able to work with the governments of the day, in partnership, and our capacity to recapture Queensland’s competitiveness.
The State of Play
Across the mining industry we’re facing challenges – inflation pressures, disruption to supply chains, labor constraints, changes to policy and the need to accelerate the global energy transition.
But as an industry we have shown resilience in facing these challenges.
Despite operating in an environment that is rapidly changing we continue to play a key part in meeting the global demand for essential steelmaking minerals.
For BMA we’re incredibly proud of our part in pursuing a lower carbon future.
It’s led to big changes in the way we operate as we seek to reduce our operational Scope 1 and 2 greenhouse gas emissions, including through the introduction of renewable power in our electricity use mix and an ambition to transition to more electrification across our fleet, as well as seeking to align our resource mix for the future.
Capitilising on the growing demand for essential minerals is becoming increasingly important not only to support the energy transition, but also the diversification, growth and future resilience of the Queensland and Australian economies.
However, even with the growth of future facing commodities global demand for the high quality metallurgical coal and iron ore that have previously underpinned Australia’s prosperity will continue to have a huge role to play.
I know I don’t need to convince anyone in this room that metallurgical coal has a future.
Queensland produces some of the world’s best quality steelmaking coal, in fact as a State, roughly 40% of global steelmaking coal export comes from
Queensland, essential to meet the growing demand driven by markets like India and South-East Asia.
China alone has recorded a fifth consecutive year of crude steel production of above 1 billion tonnes, and crude steel production in India alone has increased by over 40% since the beginning of the decade1.
These nations are rapidly building and need steel to keep up with urbanisation, population growth, the infrastructure of decarbonisation and the rise of living standards.
Demand for steel will continue to be strong, and the world’s best quality steelmaking coal – found right here in Queensland – will be in high demand several decades into the future for use in renewable energy infrastructure.
Coal’s introduction
But in my mind, the most important role of mining is the positive contribution to society made by the people and businesses all along the supply chain.
The mining sector is the largest contributor to Queensland’s economy, the largest regional employer and the largest export industry in the state.
The size of our impact is always front of mind for us, and we know it’s our people, partners and local communities that sit at the heart of what we do.
As a Queensland industry, if we look at a single year in FY23:
- The Queensland mining industry contributed more than $116 billion dollars to the Queensland economy;
- Supported more than half a million Queensland jobs – that’s 1 in 6
- And more than $18 billion in payments to the State Government, including in royalties.2
And more than 70 per cent of that comes from the coal industry. Everyone in this room should be proud of this contribution.
As an industry we are amongst the largest regional employers in Queensland, and our own team members make up a large portion of our local communities.
These are the areas where we have a proven track record of adding value in Central Queensland but they’re also the areas that most concern me when we turn our minds to headwinds facing our industry.
As every single person in this room tonight would know, the mining industry has faced a big period of change in the past few years. The environment we’re operating in now is very different to where we were three years ago – and very different to where we were more than 50 years ago.
As a business, our strategy is critical to our success. We plan years in advance so that we maintain a thriving and successful operation that can continue to support other businesses, jobs, skills and opportunities well into the future.
Of course, there will always be factors outside of our control – a pandemic, coal prices, changes in policy but by leaning on what we do best as a business and controlling what we can, we can continue to thrive – and this is Queensland’s competitive advantage.
Recapturing our competitiveness
As I said before, the outlook for Queensland’s world leading, high quality metallurgical coal is robust.
We have the fundamentals to deliver long-term economic opportunity for Queensland. However – the challenge for us as a business – and the industry more broadly – is attractiveness for capital and investment relative to opportunities in other parts of the world.
Despite the potential future opportunities, it’s difficult to attract that investment in Queensland. We continue to encourage the government to work with industry to make Queensland competitive again.
What the resource industry needs are policy and fiscal settings that give Queensland a competitive edge. Faster permitting. An industrial relations system that delivers productivity, flexibility and competitiveness to drive job creation and wage growth. Predictability and reduced risk. Under those conditions that capital will flow.
Of great concern is that the policies we have seen in recent years are taking us in the wrong direction including recent changes to industrial relations legislation, approvals and multi-employer bargaining.
Capital is global. It will flow to where the risk-returns ratio is most attractive.
Where governments act unpredictably, they increase risk for investment.
We’ve seen examples of this happening here in Queensland which have generated significant concerns from the industry, particularly on how little engagement there is on such important decisions, but it also reinforced to us the need to have a constructive dialogue with Government.
And I can say this because I’ve seen firsthand where it can and has worked.
When the New South Wales Government proposed their own changes to coal royalty rates they took the time to engage with industry and sought to understand the impact these changes would have.
Being on the ground with the NSW team I experienced the mutual benefits where this engagement was respectful with a focus on mutual understanding and collaboration. The outcome struck a balance between public needs and what was required to keep industry and New South Wales competitive.
The lack of engagement with industry in Queensland has meant that BHP has had opportunities to invest for better returns and lower risk elsewhere around the world as well as in other Australian states like Western Australia and South Australia.
I think it’s fair to say that one thing that both the Queensland Treasurer and myself as a representative of the broader resource sector agree on is how important the resource sector is to the Queensland economy and its people.
The Queensland Governments’ own budget figures show that over the last two years more than $25 billion was collected in coal royalties. The changes the Government introduced – without discussion or consultation – has seen an additional $9.4 billion dollars collected from the Bowen Basin.
And if you’re concerned about a four-year political cycle – that’s a great number. However, as everyone in this room knows when it comes to making investment decisions, the resource sector thinks in the long term. What does a decision today mean for the Company over the next 20+ years.
For BMA, combined with income taxes, we’re left with an adjusted effective tax rate of 62%. That’s a big number.
If an additional $9.4 billion dollars has been collected out of the Bowen Basin in the last two years, how does that impact the decisions made today to invest in our local communities over the next 10 years, let alone the next forty? And with such a massive increase have you then seen a similar additional fair share of investment into your regions?
Every decision that impacts our communities, whether it’s access to health services, education for your children or the skills required by our workforce, requires long term thinking.
Real change and sustainable long-term growth require the consideration of more than just what we need to fix tomorrow’s problem.
The industry numbers that are reported today are the result of investment decisions made under very different circumstances in Queensland. How long Queensland will enjoy the legacy of decisions made when fiscal settings were different remains to be seen, but responsible planning means making decisions today that will benefit for the future.
