Australia’s largest miner has delivered a harsh reality check to Queensland’s coal sector. BHP cuts 750 jobs across its Queensland coal division, marking the most significant workforce reduction in the state’s mining sector this year. The decision strikes at the heart of regional communities that have powered Australia’s economy for decades.
The Saraji South mine will enter care and maintenance from November 2025, effectively mothballing one of the state’s established operations. This dramatic move signals deeper structural problems facing Queensland’s coal industry beyond typical market cycles.
Queensland’s Royalty Regime Under Fire
BHP has squarely blamed Queensland’s progressive coal royalty rates as a primary driver for the restructuring. The state government introduced tiered royalty rates in July 2022, creating what many miners now consider an unsustainable burden.
Queensland’s current royalty structure operates across three tiers:
- 20% royalty when coal prices exceed $232 per tonne
- 30% royalty at prices above $298 per tonne
- 40% royalty for prices over $398 per tonne
BMA Asset President Adam Lancey stated: “These are necessary decisions in the face of the combined impact of the Queensland Government’s unsustainable coal royalties and market conditions“.
The timing couldn’t be worse. Newcastle coal futures have slumped to around $134 per tonne this week, marking a three-month low and down from more than $199 per tonne last October.
More Than Jobs at Stake
Beyond the 750 direct job losses, BHP is also a training facility focused on integrating new workers, especially women, into the mining sector. This potential closure highlights how cost-cutting measures extend far beyond immediate operations.
The academy’s potential shutdown represents more than financial savings. It symbolises the industry’s retreat from long-term workforce development at a time when skills shortages plague the sector.
Regional communities are bracing for the broader impact. The Saraji complex produced 8.2 million metric tons of coking coal in the year to June 2025, making it a significant economic contributor to central Queensland.
Saraji Coal Mine at a Glance
Market Pressures Mount
Coal prices have normalised from the extreme highs following Russia’s invasion of Ukraine in 2022, with coking coal last trading at $250. This represents a significant decline from the $797 per tonne peaks seen during the geopolitical crisis.
The combination of weak prices and high royalty rates has created what industry leaders describe as a perfect storm. BHP CEO Mike Henry had previously flagged the vulnerability of the Queensland division to potential mine closures and job reductions during the company’s financial results announcement in August.
The company’s strategic position remains clear: Queensland operations must demonstrate sustainable returns or face closure. This represents a fundamental shift from viewing mining operations as long-term infrastructure to treating them as market-responsive assets.
Share Price Reaction and Investor Sentiment
BHP shares are slipping on Wednesday amid news of major job reductions. The market reaction reflects investor concerns about the broader implications for Australia’s mining sector competitiveness.
BHP Share Price
The company’s coal division has become increasingly challenged compared to its iron ore and copper operations. While copper production has shown strong growth, Queensland coal faces structural headwinds that extend beyond cyclical market pressures.
This aligns with BHP’s broader warnings about Australia’s mining competitiveness, where the company has highlighted challenges from low-cost international rivals and policy-driven cost increases.
Industry-Wide Pressure Building
BHP’s announcement reflects broader challenges across Australia’s resources sector. Recent months have seen multiple mining companies announce workforce reductions as companies respond to commodity price volatility and rising operational costs.
The Queensland Resources Council has identified worker shortages, policy settings, rising costs, and global economic conditions as key concerns for the sector. However, high royalty rates have emerged as the most contentious issue for operators.
Queensland’s state government expects to collect $7.3 billion in coal royalties over the 2024-25 financial year, down from $13.9 billion in the previous year. The decline reflects both lower prices and reduced production volumes.
Political Battleground Emerges
The job cuts have intensified political debate around Queensland’s royalty regime. The Miles Labor Government has defended its progressive coal royalty tiers, claiming they have delivered $12.4 billion in extra revenue for Queenslanders since introduction two years ago.
Government officials argue the royalties ensure Queenslanders receive fair compensation for their natural resources during periods of high prices. However, industry representatives contend the rates are driving investment away from the state.
The timing coincides with upcoming state elections, where mining policy has become a central issue. Opposition parties have signalled potential changes to royalty structures if elected.
Future Implications for Queensland Mining
The BHP cuts represent more than immediate job losses. They signal a potential exodus of mining investment from Queensland unless policy settings change.
Other companies face similar pressures, with Australian coal producer Bowen Coking Coal reporting significant financing challenges that it attributed to weak hard coking coal prices and unsustainably high Queensland royalty rates.
The state’s position as Australia’s premier coal producer could face long-term challenges if operators continue viewing Queensland as less competitive than alternative jurisdictions.
For workers and communities, the immediate focus remains on supporting those affected by the cuts. The broader industry watches closely to see whether this marks the beginning of wider restructuring across Queensland’s coal sector.
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What BHP Job Cuts Mean for Investors
BHP shares have experienced significant volatility through 2025, with a modest 1.2% year-to-date gain masking considerable market turbulence. The Queensland job cuts reinforce questions about the company’s coal strategy amid the global energy transition.
While coal remains important to BHP’s portfolio, the company’s future increasingly depends on copper, iron ore, and potash operations. The Queensland cuts allow BHP to redirect capital toward more profitable operations while maintaining competitive positioning.
The broader ASX resources sector continues showing strength in other commodities, particularly copper and rare earths. However, coal’s challenges highlight the structural shifts affecting traditional mining regions.
For Queensland’s coal communities, these 750 job cuts mark another chapter in the industry’s evolution. Whether it represents a temporary adjustment or permanent contraction depends largely on policy responses and market conditions in the months ahead.
The decision ultimately reflects BHP’s commitment to maintaining only operations that generate sustainable returns. As commodity markets continue evolving and policy pressures mount, more tough decisions likely await across Australia’s mining sector.
