Queensland’s critical minerals plan skips something critical

Queensland has a critical minerals strategy. It has a four-year timeline, a ministerial media release full of momentum verbs, and $146 million in budget funding. What it does not have is a serious engagement with the most obvious reason investment in Queensland mining has been difficult to attract: the state charges some of the highest royalties in Australia, and those royalties have been rising.

Queensland has a genuine window — and is pricing itself out of it

The plan's stated logic is coherent enough on the surface. Global supply chains are reshuffling. China's dominance over critical mineral processing has become a strategic vulnerability for the United States, Europe, Japan, and Australia's other trading partners. Queensland holds genuine reserves of copper, cobalt, vanadium, rare earths, and other minerals that are now strategic priorities rather than commodity afterthoughts. The government is not wrong that there is a window, or that Queensland has the geology and the infrastructure base to exploit it.

The problem is that identifying an opportunity and capturing it are different things. What determines whether a mining project gets a final investment decision is not the quality of the minerals in the ground. It is the projected return on capital after all costs, including what governments take. On that measure, Queensland has been making things harder.

The 2022 royalty restructure sent a message investors have not forgotten

Queensland's coal royalty tiers, restructured in 2022 under the previous government, now reach 40 per cent on coal prices above $300 a tonne. That is a coal-specific measure, but it signals something to investors about how Queensland governments, of any colour, think about extractive industries when commodity prices run hot. The message is: we will take more when you make more. That is not inherently unreasonable as a principle of resource rent taxation, but it creates exactly the kind of sovereign risk premium that makes investors demand higher returns before they commit capital to long-duration projects. Critical mineral projects, which often require a decade between discovery and first production, are especially sensitive to that kind of uncertainty.

The current government's position is that Labor's "anti-mining policies" caused a decade of missed opportunity. There is something to that. Permitting delays, land access disputes, and policy uncertainty all carry real costs. But the royalty structure the current government inherited is now the current government's royalty structure. A plan released in 2026 that does not address it is a plan that has chosen not to address it.

Critical mineral projects, which often require a decade between discovery and first production, are especially sensitive to that kind of uncertainty.

Processing investment follows extraction investment — not the other way around

What the strategy does instead is focus on the parts of the value chain that are easier to talk about: processing, refining, workforce training, supply chain integration. These are legitimate areas of policy. Moving up the value chain from raw ore to refined product does increase the economic return to the state, and it is the right long-term direction. But processing investment follows extraction investment. You cannot build a refinery around a mine that has not been given a final investment decision, and you cannot attract that decision if the royalty structure makes the project marginal.

There is a version of this strategy that would be genuinely bold. It would acknowledge that royalty rates are a price signal, and that the signal Queensland is currently sending to critical mineral investors is not as competitive as the government claims. It might involve royalty holidays for new critical mineral projects in their early production years, tiered structures that reduce the rate during price downturns to keep marginal projects alive, or stability agreements that give investors certainty about what they will owe over the life of a mine. Western Australia has used mechanisms like this. So has Canada. The evidence on royalty design and investment attraction is not ambiguous.

None of that appears in the plan. What appears is a commitment to "streamlining approvals," "building sovereign capability," and "attracting new investment," which is the kind of language that fills strategies when the harder decisions have been set aside. Streamlining approvals matters at the margin. It does not change the fundamental project economics that determine whether capital shows up.

Queensland has the resources. The global demand is real. The government is not wrong about any of that. But a strategy that skips the price of entry is not a strategy for investment. It is a strategy for announcing one.

Sources

Queensland Government — Delivering Queensland's Critical Minerals Future 2026–30

Queensland Treasury — Queensland Royalties: Coal and Other Minerals

Minerals Council of Australia — Royalty Rates and Investment Competitiveness

Resources and Energy Quarterly — Critical Minerals Investment Trends

Frequently Asked Questions

What is Queensland's critical minerals strategy?
Queensland's Delivering Queensland's Critical Minerals Future 2026–30 is a four-year plan backed by $146 million in budget funding. It focuses on infrastructure, workforce training, processing, and supply chain integration to position the state as a supplier of minerals like copper, cobalt, vanadium, and rare earths.

Why do high royalties deter mining investment?
Mining projects require large upfront capital and can take a decade from discovery to first production. Royalty rates reduce the return on that capital, and unpredictable or high rates create a sovereign risk premium — meaning investors demand even higher projected returns before committing, which pushes marginal projects off the table entirely.

What did Queensland's 2022 royalty changes do?
The 2022 restructure introduced coal royalty tiers that reach 40 per cent on coal prices above $300 a tonne. While coal-specific, the change signalled to investors across extractive industries that Queensland governments will increase their take when commodity prices rise — a concern that has not been resolved by the current government.

How does Queensland compare to Western Australia on mining royalties?
Western Australia has used royalty relief mechanisms — including structures that reduce rates during price downturns — to keep marginal projects viable and attract investment. Queensland's current strategy does not include equivalent measures, leaving it at a competitive disadvantage for long-duration critical mineral projects.

Can Queensland attract critical minerals investment without changing royalty rates?
Streamlining approvals and investing in processing infrastructure can help at the margin, but they do not change the fundamental project economics that determine whether investors commit capital. A mine that is marginal under existing royalty rates will remain marginal regardless of faster permitting.