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BHP suspends operations and cuts jobs at Australian Coking coal mine

BHP suspends operations and cuts jobs at Australian Coking coal mine

BHP announced on Wednesday that it would suspend operations and eliminate 750 jobs in a Queensland coal mine, which it shares with an affiliate of Mitsubishi. It blamed low prices and high royalties from the state government for its poor returns.

BHP Mitsubishi Alliance (BMA), Saraji South, a part of the Saraji Mine Complex will be put into care and maintainance from November 2025.

The Saraji Complex produced 8,2 million metric tonnes of coking coal during the year ending June 2025.

BHP is one of the top exporters in the world of coking coal, which is used to make steel. It also owns, under the BMA name, four other mines in Queensland with Mitsubishi Development. This unit of Mitsubishi Corp.

BHP, Mitsubishi Development and BMA Asset President Adam Lancey made a statement saying that they did not want operations to be halted or jobs to be lost. However, these decisions were necessary due to the combined impact on the Queensland Government’s unsustainable coal royalty rates and the market conditions.

BHP stated that while the medium-term demand for hard coking coal is strong, it was not feasible to continue operations in areas with lower margins of the mine footprint under the current conditions.

Queensland increased royalties to 20% in July 2022 for coal prices above A$175 ($117), with a 40% top tier for prices exceeding A$300. BHP CEO Mike Henry criticized the move as being made without consultation of industry. Prior to this, the top tier of royalty rates was 15% for coal prices above A$150 per ton.

The price of coking coal has since normalised. It was last traded at around $190. Prices were above $600 per ton after Russia invaded Ukraine in 2022.

The decision came days after the Mining and Energy Union was successful in a Federal Court ruling that rejected BHP's request to delay pay increases under Australia's Same-Job, Same-Pay regulations which were introduced under the Labor Government.

This legislation ensures that workers hired by companies to perform the same tasks as employees of the company are paid the exact same amount.

The union announced last week that as a result, around 1,800 employees from mining service firms who are contracted to BMA will see their pay increase by A$20,000-A$30,000. This would be in addition to an average coal salary that is A$120,000 per year, according the salary comparison website Payscale.

Mitch Hughes, President of MEU Queensland, said that BHP should not use coal workers or communities as pawns to fight the Queensland Government about royalties.

(source: Reuters)