Tax revenue from coal production in the Australian state of Queensland is forecast to rise to A$1.93 billion ($1.4 billion) in fiscal year 2016-2017 (July-June), based on assumptions that hard coking coal prices will average $100/mt in the next fiscal year and recover from $90/mt forecast for this fiscal year, said Queensland treasurer Curtis Pitt in his mid-year review Tuesday.
Total mineral tax revenue for the state is, however, expected to slide by A$9 million this fiscal year to A$2.35 billion from A$2.44 billion at the time of the treasurer's July budget.
This is because of a collapse in petroleum and gas royalties to only A$33 million for this year, from A$129 million forecast five months ago, he said.
The Queensland treasurer revised higher Tuesday his estimate for government coal production royalty revenue for the 2015-2016 fiscal year to A$1.73 billion after forecasting at his July budget that taxes on the state's coal producers would yield A$1.68 billion for the 2015-2016 fiscal year.
Queensland's government collected A$1.61 billion in royalty taxes in the 2014-2015 fiscal year.
Coal producers in the Australian state pay a royalty tax at a percentage rate per metric ton on their coal production, and currently the percentage rates vary from 7% to 15%, and the tax is based on market prices for coal.
COAL PRODUCTION RISE
Queensland's taxable coal production is expected to reach 213 million mt in the 2015-2016 fiscal year, and then rise to 218 million mt in 2016-2017, according to treasury papers for the mid-year budget review.
Coal production in Queensland for the 2017-2018 fiscal year is forecast to be 225 million mt, said the treasury papers.
The Queensland treasury estimates that hard coking coal prices will rise to an average of $100/mt for the 2016-2017 fiscal year, from an average of $90/mt in the current fiscal year.
Semi-soft coking coal prices are expected to recover to $82/mt next fiscal year from $78/mt, according to the treasury papers.
Thermal coal prices are expected to average $65/mt this fiscal year and next, and then to edge up to $67/mt for the 2017-2018 fiscal year, said the Queensland treasury.
On Monday, Platts assessed Australian low-volatile hard coking coal at $75/mt FOB, semi-soft product at $61.55/mt and Newcastle thermal coal at $52/mt.
GAS ROYALTIES DOWNGRADE
The Queensland Resources Council said in a statement Tuesday that the Queensland government's substantial downgrade for royalties from gas producers "largely reflected the current state of the global oil market."
The coal industry body's chief executive, Michael Roche, said however that the gas sector in Queensland will deliver royalties of A$500 million in the 2018-2019 fiscal year as LNG production in the state ramped up.
Roche said the QRC called on the Queensland government to follow the lead of the New South Wales government which has sold a 99-year lease on its electricity transmission company Transgrid for A$10 billion.
"Based on this transaction, a 99-year lease of Queensland's transmission business Powerlink would yield over A$14 billion for the state. After paying off Powerlink debt, such a transaction would yield a net A$8 billion for reinvestment in essential infrastructure," he added.
