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Event Wrap: BBMC Luncheon September 2024

06 September 2024 | BBMC Events

Balanced and buoyant: Whitehaven Coal on their future in Queensland’s coal sector

The annual Bowen Basin Mining Club Rockhampton luncheon hosted a sold-out crowd of resource sector businesses and supporters, featuring an industry address by Janette Hewson of the Queensland Resources Council and a fireside chat with Paul Flynn of Whitehaven Coal.

Introducing the event, Rockhampton Regional Mayor Tony Williams acknowledged the mining industry’s importance to the local economy.

“40% of the Rockhampton economy relies on the resources sector, with 12,000 local direct jobs in the local council area, and a further 6,000 jobs in neighbouring Livingstone,” said Mayor Williams.

“Our region is renowned for its talented workforce and diverse businesses which provide unmatched support and connectivity to the growing minerals sector and coal mines on our doorstep.

“Council, through Advance Rockhampton is proud to see the Bowen Basin Mining Club return for another year and facilitate discussions between the mining industry and our community.”

This importance was echoed in Queensland Resources Council CEO Janette Hewson’s industry update.

“Here in the Fitzroy region, which includes Banana, Central Highlands, Gladstone and Rockhampton Local Government areas, the resources sector spent $4.2 billion in the 2022-23 year, including with 2,438 local businesses and 549 charities and sports clubs.”

“Since June 2023, the resources industry in Queensland exported $58.3 billion worth of coal, with $48.4 billion of that as metallurgical coal and $9.9 billion worth of thermal coal. We are Queensland’s biggest export industry, comprising 82% of all exports when you consider the LNG industry as well.”

As the state counts down to the 2024 election, Ms Hewson used the opportunity to highlight the QRC’s 2024 Election Priorities. Focusing on competitive and stable policy, a fair return for the regions, skills for the future, and energy security, diversity and transition, the QRC’s priorities are aimed at keeping Queensland competitive.

“We’re offering real solutions to the incoming government, not just a statement on how things aren’t working. The QRC is sending a clear message to all sides of politics that the industry must be consulted to ensure a pipeline of investment in resources for the security of Queensland’s future.”

Whitehaven Coal CEO Paul Flynn joined Bowen Basin Mining Club Director Jodie Currie for a fireside chat to round out the luncheon’s program. As the recently established owners of both Blackwater and Daunia mines in Central Queensland and the proponents of the recently approved Winchester South Mine, Whitehaven are now a significant player in the Queensland mining industry.

Mr Flynn was buoyant about the company’s presence in Queensland, saying that the balance of Queensland assets brought a significant diversification to Whitehaven.

“We were drawn to Queensland to balance our business with the acquisition of metallurgical coal assets, rounding out our thermal coal portfolio in NSW’s Gunnedah Basin. Whitehaven now has scale and long-life assets in the Bowen Basin, with 20 Mtpa in QLD to balance our 20 Mtpa of capacity in NSW.”

“While our first quarter results are satisfying, there has been some change to the way we operate. Our company is structured very differently, with a lot more simplicity, but we’ve seen a whole new enthusiasm in the workforce on our Queensland sites.”

Commenting on the recent sell-down of 30% interest in Blackwater, Mr Flynn linked the strategic choice to bringing Whitehaven closer to its customers.

“The demand through the competitive asset sale showed that interest in the Blackwater and Daunia assets were very high. We see long-term value in partnering with Nippon Steel and JFE as long-term Tier 1 users who want our metallurgical coal. Their partnership validates the ongoing demand for our product internationally.”

“However, their investment is also tinged with a hint of anxiety about the future of supply, based on the current royalty scheme in Queensland. As long-term purchasers of Blackwater coal, these companies no longer believe there is security in Queensland policy, and that should be worrying.”

Speaking further on royalties, Mr Flynn was to the point: the top-tier rate of 40% is not a royalty, it’s a super profits tax.

“The cost base of the coal industry has just increased in response to the royalties – driving inflation rather than balancing it. As a company, we are up for paying royalties on the resources we mine. However, we are putting the capital up and taking all the risks, and now the peaks of our returns have been well and truly capped. If we have lower margins and more volatile returns, the entire industry – right through to suppliers – suffers.”

Of clear importance to Whitehaven is the establishment of the company as a long-term partner to the communities in which it operates. Mr Flynn used the event to announce that 23 November will be the first Whitehaven Coal open day at Blackwater.

“We want the community to understand the value of us being in the region. We want people to be employed in the region, and we want them to stay. We understand a residential workforce based on our NSW operations, and we’re looking forward to the opportunity to invest as much as we can in Central Queensland.”

This extends to suppliers, with all supplier contracts brought across with the operations and a new procurement portal established on the Whitehaven website for suppliers new to the company.

Flynn also spoke about Whitehaven’s role in the newly formed Coal Australia, saying it doesn’t replace any existing advocacy, but helps to streamline coal’s messaging in the Australian marketplace and educate Australians about the need for coal into the future.

And it’s clear Whitehaven is excited about that future.

“The Bowen Basin is the premium coal basin in the world, positioned in relation to both existing and future consumption. We have both quality and proximity to market – and our company has just invested $7 billion to become a part of Queensland’s metallurgical coal industry – so of course we see a strong future here.”

The final Bowen Basin Mining Club luncheon for 2024 will be held in Mackay on Wednesday November 20th. Tickets will go on sale next week.