Qld premier rules out another royalty hike

QUEENSLAND Premier Campbell Newman says he won't repeat last year's controversial mining royalty hike.

His promise was made as he attended the opening of a new coal mine in the state's Bowen Basin by BHP Billiton and joint venture partner Mitsubishi.

Mr Newman's government hiked royalties on coal in 2012, infuriating miners like BHP.

"The changes we made to the royalty regime were made after a lot of soul searching and I guess with a heavy heart," he told reporters on Wednesday.

"We didn't like to do that at all, we won't be changing them again."

Mr Newman also said his government was working to pass regulatory reform that help mines to trim operating costs.

BHP's president of coal Dean Dalla Valle said he and Mr Newman had exchanged words about the impost of royalties, but also said the Queensland government had worked hard to ensure business achieved productivity in other areas.

The BHP Billiton Mitsubishi Alliance (BMA) has started production at the $US1.4 billion Daunia mine despite coking coal prices having plunged so far in the last two years that most coal mines have become unprofitable.

BMA also has plans to open another larger mine in 2015, and that comes after a year in which the group has been shrinking its coal operations.

It has shut two other coking coal mines, cutting jobs and contractors and slashing costs.

A protracted industrial dispute and wet weather have also hurt BMA's operations.

Mr Dalla Valle said he saw good long term demand for metallurgical coal despite the short term challenges, including supply from competitors in the US and China.

"We really want to turn this around and make it a very big fourth pillar for this company," he said, referring to BHP's other important businesses of iron ore, petroleum and copper.

Daunia's construction came in $200 million under budget, and the mine employs 450 workers.

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