Case centres on state’s 2015 decision to hit company with bill for unpaid royalties and interest

This article is more than 2 years old

This article is more than 2 years old

Mining giant BHP and the Queensland government have reached an “in principle” agreement to settle a long-running $288m coal royalty dispute, the state’s supreme court has heard this morning.



The case, which experts said would likely have broad implications about the way mining royalties could be calculated and levied, centres on a 2015 decision by the Queensland Office of State Revenue to hit BHP Billiton with a bill for what it claimed were unpaid royalties and interest.

The bill relates to coal sold by the BHP-Mitsubishi alliance to BHP’s own Singapore-based marketing operation between 2005 and 2012.

The state has claimed that royalties should be calculated based on the price coal customers pay to BHP’s marketing hub, and that using that body as middleman had the effect of sidestepping royalties.

BHP has previously argued royalties should be calculated when the alliance, a partnership that mines most of the company’s Queensland coal, sells to the BHP marketing hub.

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The alliance operates seven coalmines in the Bowen basin – Goonyella Riverside, Broadmeadow, Daunia, Peak Downs, Saraji, Blackwater and Caval Ridge – and owns and operates the Hay Point coal terminal near Mackay.

BHP disputed the state’s 2015 assessment and claim for unpaid royalties and took the treasurer to court (BHP’s action is against the treasurer as a statutory office, not the individual who is the treasurer). A trial, scheduled to begin on Monday, was adjourned after the lawyer for BHP, John Sheahan QC, told the court a settlement was pending.

“I’m instructed I can tell Your Honour that an agreement in principle has been agreed between the two parties. The parties are hopeful [and] confident of completing those negotiations through the course of the day,” Sheahan said.

The supreme court justice, Peter Davis QC, said: “I assume this is a case that’s going to settle because of commercial considerations rather than anything I can add.”