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(Bloomberg) — BHP Group Ltd. said it will shutter one of its Queensland coal mines and slash about 750 jobs across the division, citing high state royalties and weak market conditions that have made low-margin operations unsustainable.
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The Saraji South mine — which BHP owns in a 50:50 venture with Mitsubishi Corp. — will be placed on care and maintenance from November, the company said in a statement on Wednesday. Other assets in the BHP-Mitsubishi Alliance (BMA) portfolio — including Peak Downs and Caval Ridge — will not be affected, a spokesperson added.
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“These are necessary decisions in the face of the combined impact of the Queensland government’s unsustainable coal royalties and market conditions,” BMA Asset President Adam Lancey said. “The uncertainty this creates for our people and our communities is not taken lightly.”
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Queensland state’s coal royalties were hiked in 2022 to capture soaring prices for the steel-making ingredient, which touched record highs amid uncertainty over China’s import policy and Russian exports. The move attracted criticism from resources companies including Melbourne-based BHP and other major coal miners in the region, such as Stanmore Resources Ltd. and Coronado Global Resources Inc.
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At the same time, the world’s biggest miner has made efforts in recent years to move out of coal in order to pivot into energy-transition materials. BHP sold two metallurgical coal assets to Whitehaven Coal Ltd. for at least $3.2 billion in 2023, reducing the number of coal assets in the BMA portfolio to five — including Saraji.
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BMA said it had an effective tax and royalty rate in Queensland of 67% in the 12 months to June, even as coking coal prices have fallen.
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While iron ore remains the biggest earnings driver for BHP, copper and potash have become key priorities for the group, Chief Executive Officer Mike Henry said in an interview with Bloomberg TV last month.
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