Start with the number a miner actually said out loud. BHP ($BHP) Mitsubishi Alliance — Australia's largest exporter of steelmaking coal — told MINING.COM that Queensland's coal tax had it paying A$0.67 in royalties for every dollar it earned, about eight times what the operation made in profit — a level BMA president Adam Lancey called unsustainable. In September BMA suspended its Saraji South coking-coal mine near Dysart from November and cut about 750 jobs across Queensland. That is not a price story. That is a royalty story.
The lever is Queensland's 2022 progressive royalty. On top of the pre-existing tiers, the state added a 20% marginal rate above A$175/t, 30% above A$225/t, and 40% above A$300/t — applied only to the slice of price inside each band. It is, by BHP's own description to MINING.COM, the highest coal royalty regime in the world. And it is levied on revenue, not profit.
A royalty that scales with price but ignores cost is a tax on the act of mining. It hits the high-cost Queensland tonne hardest precisely when margins are thinnest.
Here is the cost-curve problem. Premium hard coking coal has spent 2025–26 mostly in a band that clears the A$175/t first threshold but rarely comes near A$300/t. So producers sit on the bulk of their price inside the lowest new (20%) tier, while the headline 40% rate does most of the political talking. Either way, the effective take stepped up materially from the pre-2022 regime and sits above what miners pay in New South Wales — and crucially, it bites on revenue, not profit, so it lands hardest exactly when prices and margins are thin.
Now stack the financing problem — the subject of our coking-coal cost-of-capital piece, which we won't relitigate here. Thin the lender pool with ESG mandates, then add a royalty that strips cash before the bank gets paid, and the marginal Bowen Basin operator runs out of room. That is the compounding, and it is who gets culled first.
Who's hit. Bowen Coking Coal (BCB) is the cautionary tale. Its subsidiary asked the Queensland Revenue Office for a short-term royalty deferral; the QRO declined the initial proposal on 23 July 2025, and after a revised request was rejected on 29 July, the board appointed McGrathNicol as administrators — citing higher costs, lower prices and the 2022 royalty rates. The Burton Mine Complex near Moranbah and roughly 500 jobs went into the window; Broadmeadow East and Bluff were already in care and maintenance.
BHP is the heavyweight reading the same math. BMA's first-half FY2026 underlying earnings fell 34%, with return on capital employed at zero, CFO Vandita Pant calling the royalty regime a "real headwind." By April BHP and Mitsubishi had launched a review to rank each Queensland mine by financial health after the assets returned no profit in the half to December. BHP has also said it won't develop new Queensland tonnes.
The redirection is already visible. Whitehaven Coal ($WHC) — which bought Daunia and Blackwater from BMA for up to US$4.1bn — has said it will steer new investment to NSW. Stanmore Resources ($SMR) stayed cash-positive but felt it: FY2025 underlying EBITDA fell to US$385m from US$700m, with a statutory net loss, despite record output. Glencore ($GLEN)'s steelmaking-coal margins reportedly held up better than BMA's through the same stretch, but it has been pruning its Queensland coal exposure for years.
And the leading indicator is drilling. Queensland coal exploration spend was A$55m in the September quarter, down 7.9% — the fifth straight quarterly fall. Capital doesn't argue. It leaves. In our view the Crisafulli government's "don't hold out hope before 2028" line tells you exactly how long that drift has to run.