BHP to Shutter Coal Mine, Cut 750 Jobs — 2nd Update

By Rhiannon Hoyle

BHP Group will shutter one of the coal mines it runs in Australia with Japan's Mitsubishi Corp. and lay off roughly 750 workers, in response to soft coal prices and high royalty rates in Queensland state.

BHP, the world's largest miner by market value, said Wednesday that the Saraji South mine--part of the Saraji Mine Complex run by BHP Mitsubishi Alliance--will be suspended from November. The BMA joint venture is Australia's largest exporter of steelmaking coal, which the companies ship mostly to mills across Asia.

BHP said it will also conduct a strategic review of its FutureFit Academy in the city of Mackay, putting a cloud over one of BHP's major training centers for people seeking to work in the mining industry.

Officials in Queensland sharply increased royalty rates on coal sales in 2022, saying they were trying to ensure maximum benefit from local natural resources. Queensland's royalty rates are the highest in the world, said BHP.

The company said that it isn't sustainable for BMA to keep mining lower-margin operations under current conditions. In fiscal 2025, BMA had an effective tax and royalty rate of 67%. Royalties and other government payments cost BMA roughly eight times the net profit it made.

"The simple fact is the Queensland coal industry is approaching a crisis point," BMA Asset President Adam Lancey said in emailed remarks.

The companies "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," Lancey said.

Prices for steelmaking coal have been under pressure from weak demand in Europe and parts of Asia, which has more than offset some rain-related supply disruptions in eastern Australia. Prices for Australian coal are down by roughly 40% since the start of last year.

While the entire Saraji Mine Complex produced around 8.1 million metric tons of coal over the 12 months through June--BHP's fiscal 2025--Saraji South is only a small contributor to the joint venture's total output. As such, there is no impact to BMA's fiscal 2026 or medium-term production or unit cost guidance, a BHP spokesperson said.

BHP isn't alone in finding the market backdrop challenging. In July, Bowen Coking Coal, which runs the Burton Mine Complex, said it would enter voluntary administration after a request to defer royalty payments in Queensland was rejected.

Queensland Resources Council Chief Executive Janette Hewson said the industry group is urging officials to reform royalty rates.

"The impact of the royalty tax increase coupled with a drop in coal prices and soaring production costs is simply making it unviable for many coal producers in Queensland to continue operating," Hewson said.

The state's deputy premier, Jarrod Bleijie, said officials made a commitment not to adjust the royalty structure before being elected late last year.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

September 17, 2025 01:48 ET (05:48 GMT)