Glencore cites coal royalties in withdrawing from $2b Valeria project
Friday, December 9th, 2022
The decision on the Queensland project comes amid the industry’s determination to transition away from fossil fuels and towards decarbonisation.
According to Glencore, the significantly increased taxes as part of Queensland’s new coal royalties also played a role in the decision to pull the plug on Valeria.
“This decision has been made in the current context of increased global uncertainty and is consistent with Glencore’s commitment to a responsibly managed decline of our global coal business and our ambition of being a net-zero total emissions business by 2050,” the company said.
“We will continue to progress various brownfield coal extensions at existing mines in Australia but note that within the next four years our Liddell, Newlands and Integra mines will close and undergo appropriate rehabilitation.”
A Glencore spokesperson told the Australian Financial Review that Queensland’s controversial royalties program was partially to blame for the decision to with draw from Glencore.
“Abrupt decisions like the Queensland super royalty hike have damaged investor confidence, increased uncertainty and raised a red flag with key trading partners,” the spokesperson said.
“Genuine and timely consultation with companies on the detail of the policy reforms is crucial to avoid continued uncertainty.”
Glencore’s $US1.3 billion ($2 billion) project was anticipated to produce up to 20 million tonnes of coal per year over a 37-year lifespan.
Acquired from Rio Tinto in 2018, the Valeria project was slated to land in the Bowen Basin, 27km north-west of Emerald and be constructed by the Blair Athol joint venture. The project was originally included in Glencore’s decarbonisation pathway, which sought to achieve a 50 per cent reduction in carbon emissions by 2035 and achieve net-zero emissions by 2050.
Glencore listed operational employment opportunities for up to 1250 personnel, up to 1400 construction jobs and an estimated production expenditure of $1.5 billion. Construction for the mine was slated for 2025, with planned operations commencing in 2027.
The new Queensland coal royalty structure, which has netted the State Government $5.2 billion, has seen a number of companies question their future investments in the state.
BHP is among the companies that have paused investment in Queensland. Chief executive officer Mike Henry shares the sentiment that the introduction of the coal royalties was surprisingly sudden.
“It didn’t involve any engagement with industry which has been a significant increase in the sovereign risk associated with Queensland, which has caused us to say we really can’t deploy further capital into that business for the time being and we’ll go back and reassess what the plans for the business are going forward,” Henry said in August.