Wedoany.com Report-Sept. 17, BHP (BHP.AX) announced on Wednesday that it will suspend operations and cut 750 jobs at a Queensland coking coal mine jointly owned with Mitsubishi Development, a subsidiary of Mitsubishi Corp. The decision, attributed to low coal prices and high state government royalties, will affect Saraji South, part of the Saraji Mine Complex, which will enter care and maintenance from November 2025.

A view shows the BHP Group logo at their headquarters in Melbourne, Australia, March 24, 2025.

The Saraji complex produced 8.2 million metric tons of coking coal in the year ending June 2025. BHP, one of the world’s major exporters of coking coal used in steelmaking, also operates four other mines in Queensland under the BHP Mitsubishi Alliance (BMA).

BMA Asset President Adam Lancey said: "As joint owners of BMA, BHP and Mitsubishi Development do not want to see operations paused or jobs lost, but these are necessary decisions in the face of the combined impact of the Queensland Government’s unsustainable coal royalties and market conditions."

BHP explained that while medium-term demand for its hard coking coal remains strong, continuing production in lower-margin sections of the mine is not sustainable under current conditions.

Queensland revised its royalty system in July 2022, raising rates to 20% for coal priced above A$175 ($117) per ton, and introducing a top tier of 40% for coal above A$300. The earlier maximum rate was 15% for coal above A$150. BHP CEO Mike Henry noted that these changes were implemented without industry consultation.

Global coking coal prices, which peaked above $600 per ton after the Ukraine conflict in 2022, have since stabilized and are currently around $190 per ton.

The suspension announcement followed a Federal Court ruling against BHP’s request to delay pay increases under Australia’s same-job same-pay legislation. The law requires that labor-hire workers performing the same tasks as company employees receive equivalent pay.

According to the Mining and Energy Union (MEU), the court ruling will increase the pay of about 1,800 workers employed by mining services firms contracted to BMA. Their salaries are expected to rise by A$20,000 to A$30,000 annually, in addition to an average coal sector wage of about A$120,000 a year, based on data from Payscale.

MEU Queensland President Mitch Hughes commented: "BHP should stop using coal workers and communities as pawns in its fight with the Queensland Government over royalties."

The company stated that it remains committed to its other Queensland operations despite the decision regarding Saraji South. The situation highlights the combined impact of shifting commodity prices, regulatory changes, and labor cost adjustments on the coal sector.

BHP and Mitsubishi Development are expected to continue monitoring market conditions to determine the future of Saraji South, while maintaining their broader coking coal operations in the region.