Glencore has shelved development of a A$2 billion ($1.3 billion) coal mine in Australia’s Queensland state given global uncertainties and a hike in state royalties that damaged investor confidence, it said on Thursday.
The miner had been in a permitting process for the Valeria mine in the Bowen Basin, which would have produced up to 20 million tonnes of thermal and metallurgical coal a year, and was part of a package it bought from Rio Tinto Ltd for $1.7 billion in 2018.
Its decision comes against a backdrop of uncertainty over the speed of global decarbonisation and as project finance has become harder to find for greenfield coal mines – those that are not expansions of existing projects.
“Glencore has decided to withdraw the Valeria coal project from the current approvals process and will place the project under review,” it said in a statement.
“The decision has been made in the current context of increased global uncertainty,” it said, adding the move was in line with its commitment “to a responsibly managed decline of our global coal business and our ambition of being a net zero total emissions business by 2050.”
Queensland, also home to coal mines owned by majors BHP Group Ltd, Anglo American PLC and Peabody Energy Corp, in June ended a 10-year freeze on royalty rates and raised them to capture windfall profit.
The state on Wednesday forecast a record surplus of A$5.2 billion for the current financial year, largely driven by the higher royalty payments.
“Governments are already benefiting from higher royalty and corporate tax revenue from the Australian coal sector,” a Glencore spokesperson added.
“Abrupt decisions like the Queensland super royalty hike have damaged investor confidence, increased uncertainty and raised a red flag with key trading partners,” he said.
Australia is expected to announce caps on gas and coal prices before Christmas, possibly in the coming days.
