BHP’s pursuit of regulatory approvals for new coal mines in Queensland is being driven more by financial, accounting and strategic considerations than by immediate development plans, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). The report argues that approved mining projects can preserve asset values, defer rehabilitation liabilities and protect critical infrastructure investments even if the mines are never developed.
According to the IEEFA report, BHP has repeatedly argued that higher royalties introduced in 2022 have weakened Queensland’s competitiveness for new steelmaking coal investments. However, BMA continued advancing the proposed Saraji East underground coal mine through the Environmental Impact Statement process and secured regulatory approval, preserving future development options despite its public criticism of the state’s fiscal policy.
Operational decisions further illustrate this approach. In late 2025, BMA placed the Saraji South section of the Saraji mine into care and maintenance after concluding it was uneconomic under prevailing market conditions and the revised royalty regime. Despite benchmark metallurgical coal prices recovering by approximately 20 percent, production has not resumed. IEEFA also cited BHP’s decision to suspend its Western Australian nickel operations in 2024, resulting in a US$3.5 billion impairment, as evidence of how the company responds to changing commodity economics.
The report — authored by Andrew Gorringe, Energy Finance Analyst – Australian Coal at IEEFA — argues that approved mining assets can deliver significant financial benefits without producing a single tonne of coal.
BHP’s 2025 Annual Report disclosed that its steelmaking coal portfolio could face an indicative impairment of approximately US$2 billion, or around AU$3 billion, under a 1.5 degrees Celsius climate scenario extending to 2100.
Though BHP considers that scenario unlikely, its external auditors identified climate-related asset valuation assumptions as a Key Audit Matter. Maintaining approved mining projects can therefore support balance sheet values, reduce impairment risks and strengthen long-term valuation assumptions.
Mine rehabilitation liabilities represent a major financial consideration. Queensland’s rehabilitation obligations have expanded by approximately 3,000 hectares annually over the past five years, with the state’s Estimated Rehabilitation Cost reaching AU$14.3 billion by 2025. BMA accounts for an estimated AU$2.4 billion of those liabilities across its permitted operations.
Drawing on data from the Queensland Mine Rehabilitation Commissioner, IEEFA states that BMA has recorded the lowest rehabilitation rate among Queensland’s major coal producers and has completed zero progressive rehabilitation since the rehabilitation framework was introduced six years ago. Although the company reduced its Estimated Rehabilitation Cost by more than AU$1 billion through asset divestments, rehabilitation activity itself has remained limited.
BHP’s financial disclosures highlight the importance of mine life assumptions. Its 2022 Annual Report estimated that bringing forward coal mine closures increased rehabilitation provisions by approximately US$750 million. The 2025 Annual Report also noted that changing a mine’s expected operating life by just one year changes rehabilitation provisions by around US$40 million.
IEEFA argues that extending mine approvals allows companies to defer these substantial future obligations. Examples include extending the Peak Downs mine by 93 years to 2116 and seeking a further 30-year extension for the Saraji Grevillea pit.
The report also concludes that mine approvals help preserve the value of Queensland’s coal export infrastructure. BMA owns the Hay Point Coal Terminal and operates under long-term take-or-pay logistics agreements.
However, throughput at Hay Point has declined by approximately 25 percent over the past six years, falling to 37 million tonnes in FY2026. Maintaining approved future production supports the commercial value of Hay Point, Aurizon rail access agreements and BMA’s privately owned rolling stock, which transports approximately half of the company’s coal production.
IEEFA disputes claims that Queensland’s 2022 royalty reforms alone caused lower coal investment. Since BHP’s 2015 demerger of South32, capital expenditure has remained largely focused on sustaining production, operational improvements and debottlenecking existing assets rather than developing major greenfield coal projects. The report also points to rising strip ratios across Queensland coal mines during the past four years, increasing reliance on diesel-powered mining equipment and driving higher operating costs regardless of royalty policy.
The report raises questions about Queensland’s mine approval process, noting that the economic assessment supporting the Saraji East Environmental Impact Statement relied on market assumptions from 2019 rather than current industry conditions. As a result, key developments—including the 2022 royalty reforms and significant increases in mining costs—were not reflected despite government guidance requiring the use of the latest available information.
IEEFA also highlights financial risks if aging mining assets are eventually transferred to smaller operators with weaker balance sheets. Queensland’s financial provisioning scheme currently provides a safety net of approximately AU$530 million and is undergoing governance reforms that will transfer oversight from Treasury to the Department of Natural Resources and Mines.
Globally, metallurgical coal markets are also evolving. Australia’s share of global metallurgical coal exports fell below 50 percent in 2023 as competitors including Russia and Mongolia expanded production. Meanwhile, the Australian Government reduced its long-term metallurgical coal export forecast from a projected peak of 190 million tonnes in 2021 to 164 million tonnes, reflecting slower demand growth and changing market conditions.
According to Andrew Gorringe, BHP’s continued pursuit of mine approvals is likely intended to preserve billions of dollars in asset value, defer substantial rehabilitation liabilities, protect integrated rail and port infrastructure and maintain long-term strategic flexibility rather than signal imminent mine development. The report concludes that as Queensland’s coal industry faces rising environmental obligations, evolving investor expectations and changing global demand, mine approvals are increasingly serving as financial and strategic assets rather than immediate production commitments.
SHAFANA FAZAL
