Coal royalties to fall by 53 per cent this financial year
COVID-19 has hit state coffers like a wrecking ball, with coal royalties to fall 53 per cent this financial year.
Queensland Budget documents handed down today have laid bare the bleak state of coal royalties and export figures.
The state's coal royalties totalled $3.517 billion in 2019-20.
This was 19.6 per cent lower than in 2018-19 and 4.9 per cent lower than forecast at the 2019-20 Mid-Year Fiscal and Economic Review.
And more bad news is on the way with these royalties expected to fall a staggering 53.3 per cent in 2020-21.
"This decline across the two years is driven by lower coal prices and volumes, reflecting weaker global economic growth, which was exacerbated significantly by the pandemic," the documents stated.
"Some of the world's largest steelmakers have scaled back operations due to a decline in steel demand, while restrictions in Japan and Korea are expected to reduce power demand.
"Ports data from Queensland's major coal export ports indicates that Queensland's coal exports were 13.5 per cent lower over the financial year to October 2020."
The State Government's budget strategy and outlook report revealed the volume of Queensland's coal exports fell 3.1 per cent in 2019-20.
It stated this was mainly driven by a COVID-19-induced drop in demand in June quarter 2020, with exports 9.8 per cent lower over the year to the June quarter.
"Coal prices subsequently showed signs of recovery, however media and market reports of restrictions on Australian coal imports by Chinese authorities from the start of October has seen coal prices more recently fall back to around their respective lows for the year," the report said.
In the first quarter of 2020-21, the volume of Queensland's coal exports was 8.3 million tonnes lower than in the same quarter in 2019-20.
Thermal coal exports took the biggest hit from this decline, falling by 7.3 million tonnes.
The report revealed coal exports would not recover until next financial year.
"Reflecting the reduced demand in the first quarter, the continued impacts of COVID-19 and the uncertainty surrounding Australian access to the Chinese market, Queensland's coal exports are forecast to fall 8 per cent in 2020-21," it stated.
"However, coal exports are expected to recover by 9.75 per cent in 2021-22 as the global economy begins to recover and demand for coal rebounds."