Royalty shock hits Queensland’s coal regions as spending collapses in three hubs

Regional Queensland delivered almost half of the 115.2 billion AUD that the resources sector added to the state economy in 2024–25. Yet the same regions are now bracing for the full impact of Queensland’s coal royalty fight and a sharp pullback in mining spend.

The latest QRC Economic Contribution Report 2025 confirms the resources industry supported about 550,000 direct and indirect jobs statewide last financial year, with nearly half of those positions based outside Brisbane.

QRC chief executive Janette Hewson describes regional Queensland as the backbone of the sector, but warns that the combination of high costs and what industry calls the world’s highest coal royalty rates is starting to bite.

“Regions make a significant contribution to the success of the resources sector,” Hewson says, but rising costs and the royalty settings “are taking a toll” and are likely to hit key coal regions over the coming year.

Mackay, Fitzroy and North West count a 3.44 billion dollar hit

The report highlights a steep fall in direct spending by resources companies across three of Queensland’s core coal regions in the past 12 months.

According to the QRC data:

Mackay region: spending down by about 2 billion AUD
Fitzroy: down 1.1 billion AUD
North West Queensland: down 346 million AUD 

Across those three regions combined, the sector’s contribution to local Gross Regional Product fell by 3.44 billion AUD, and the industry still supports 133,380 direct and indirect jobs there.

Hewson says there is “a lot at stake” for communities in Mackay, Fitzroy and the North West if the current royalty regime continues to act as a handbrake on investment and mine life extensions.

For local suppliers, the change is already visible in order books.

Dean Kirkwood, general manager of Mackay-based Resource Industry Network (RIN), calls the drop in spend “substantial” for towns that rely on coal and METS work.

“This is a substantial amount of money to be taken out of local economies that are so reliant on a strong and vibrant resources sector,” Kirkwood says. He warns of “serious concerns about the flow-on impact on local jobs over the coming years”.

Kirkwood is blunt about what that means on the ground: less money flowing through the region’s mining equipment, technology and services (METS) cluster, fewer contracts for small contractors, and more caution around new hires or capital purchases.

METS and equipment suppliers on the frontline

For HeavyQuipmag readers, the numbers translate directly into pressure on workshops, dealers and contractors.

Kirkwood notes that the dollars being removed from regional economies were previously being spent with local METS businesses, individual suppliers and contractors who keep Queensland’s coal mines running.

At the same time, a series of mine decisions has tightened the screws:

BHP Mitsubishi Alliance (BMA) has chosen not to proceed with the Saraji East underground mine in the Bowen Basin, despite environmental approval, explicitly citing Queensland’s royalty regime as “unsustainable”. The project had been expected to support up to 1,000 construction and 500 operational jobs and a major new fleet of underground and surface equipment.
BMA is also mothballing Saraji South and cutting around 750 jobs across Queensland, affecting operations and training facilities around Mackay.
QCoal’s Cook Colliery has now been closed, with around 70 jobs lost, after struggling to turn a profit under low prices, high costs and the current royalty structure.

These decisions ripple along the value chain. Fewer greenfield projects and early mine closures mean fewer full new fleets of trucks and loaders, but more demand for:

• component rebuilds in Mackay and Rockhampton
• life-extension projects on existing fleets
• efficiency upgrades such as autonomy, high-efficiency dragline parts and advanced maintenance services

In other words, the mix of work is shifting from growth capital to defensive spending, exactly as you would expect when margins come under pressure.

Royalties at the centre of the dispute

At the heart of the debate is Queensland’s progressive coal royalty scheme, introduced in July 2022.

The latest schedule, as published by Queensland Revenue Office, applies a sliding scale per tonne based on the average price received:

up to 100 AUD per tonne: 7 percent
100 to 150 AUD: 12.5 percent on the slice above 100
150 to 175 AUD: 15 percent on the slice above 150
175 to 225 AUD: 20 percent on the slice above 175
225 to 300 AUD: 30 percent on the slice above 225
above 300 AUD: 40 per cent on the slice above 300

Industry groups, including QRC, have repeatedly branded this as creating “the world’s highest coal royalty rates”, arguing it leaves Queensland uncompetitive against New South Wales, North America and emerging suppliers like Mozambique.

However, an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) challenges the idea that miners are consistently paying 40 percentIEEFA calculates that, based on average coal prices, the effective royalty rate in 2024 was closer to 20 percent, and that on price forecasts for 2025 the average rate would fall to around 10 percent, only about one percentage point higher than the old regime.

Queensland Treasury budget papers, and independent reporting, show how this plays out in revenue:

2022–23: coal royalties peaked at around 15.3 billion AUD
2023–24: fell to about 8.2–10.5 billion AUD depending on the measure
2024–25: forecast to drop again to roughly 5.5 billion AUD as prices normalise

So the political reality is awkward. The state government has banked a short-term windfall and used part of it to fund power bill relief and infrastructure, while miners and regional groups now argue that the long-term cost is lost projects, job cuts and a sharp fall in local spending.

“Flawed” regime or necessary reset? Regional leaders push back

The joint statement from QRC, RIN and Greater Whitsunday Alliance (GW3) is carefully worded, but the frustration is clear.

Kirkwood argues that the State Government has “inherited a flawed coal royalty regime that is damaging new investment” and must move back to what he calls a fairer and more balanced system before more jobs are lost.

GW3 chief executive Kylie Porter stresses how deeply the Mackay region is tied to resources:

more than 65,000 jobs in the Mackay region are directly or indirectly linked to the resources sector, according to GW3 and earlier employment studies for the Greater Whitsunday region

Porter describes the local economy as diversified, but still heavily underpinned by coal and associated supply chains. In her words, it is crucial the sector “remains strong, supported by policies that promote new investment”. 

Behind the scenes, regional organisations are sharpening their campaigns. RIN’s “Fix Royalties, Save Jobs” material frames the current settings as a direct threat to coal jobs, suppliers and regional towns, highlighting that roughly one in six Queensland jobs depends on the broader resources sector and that resources fund about a quarter of the state budget.

Government stands firm, analysts warn against oversimplifying the blame

Premier David Crisafulli has publicly ruled out any change to the royalty structure, saying that reversing the reforms would undermine Queensland’s ability to fund services and concessions.

The government’s line is that royalties rose sharply when prices were extraordinarily high, and are now falling in line with the market. From that perspective, the regime is doing what it was designed to do: capture more revenue at the top of the cycle and less when prices ease.

Independent economists also point out that coal is a cyclical commodity. An ABC analysis of the Saraji South job cuts notes that the industry has a long history of peaks and troughs and that global shifts in steel demand, cost inflation and exchange rates are important parts of the story, alongside royalties.

IEEFA goes further, arguing that margins for major coal producers in Queensland remain solid by historic standards, with several miners still reporting double-digit operating margins in 2025 even after the royalty change.

For readers, the takeaway is that royalties matter a lot at the margin, especially for older or higher-cost mines, but they are not the only lever that determines whether a project lives or dies.

Where this leaves contractors, OEMs and mining towns

From an equipment and services perspective, Queensland’s coal story is shifting from “how fast can we grow” to “who survives the downturn and on what terms”.

Fewer big greenfield fleets

Projects like Saraji East going on ice remove what would have been decade-long demand for underground fleets, conveyors and surface support gear in the Bowen Basin.
Brownfield expansions still proceeding

Peabody’s Centurion mine extension near Moranbah has just been fast-tracked as a coordinated project, with a 662 million AUD investment expected to secure more than 500 jobs and extend steelmaking coal exports to about 2055. That supports ongoing, if more selective, demand for equipment and maintenance services.
Service and rebuild work likely to grow

With royalties, costs and prices all squeezing margins, miners are likely to sweat assets longer. That favours rebuild centres in Mackay and Rockhampton, parts distributors, and retrofit specialists over pure new-unit sales.
Local supply chains under pressure

The 3.44 billion AUD drop in regional GRP across Mackay, Fitzroy and the North West shows up as fewer contracts for civil works, haulage, fabrication and shutdown crews. For many owner-operators, work is still there, but at tighter margins and with shorter horizons.