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BHP fights US$205m royalty bill on Australian coal sales

[SYDNEY] BHP Billiton is disputing an A$288 million (S$291.8 million) coal royalty bill from Australia's Queensland state, stemming from how it measures the value of coal, it said on Thursday.

BHP Billiton has long defended a policy of calculating its royalty payments based on the first sale of the coal to its BMAG marketing hub in Singapore, where it pays lower corporate tax.

Queensland state, where the mining occurs, contends it is owed the money because the royalties should be based on the price BMAG subsequently sells the coal to customers.

BHP has lodged an application with the Supreme Court of Queensland over royalty reassessments issued by the Office of State Revenue covering its share of coal mined in a 50-50 partnership with Mitsubishi Corp between July 1, 2005 and December 31, 2012.

A spokesman for Queensland Treasurers office declined to comment on the dispute.

The reassessments total A$186 million in royalties and A$102 million in interest, according to BHP, which said it had already paid some A$2.4 billion in Queensland state royalties over the period.

BHP gets an Australian tax advantage from operating in Singapore because of dual listings on the London and Australian bourses.

The double listing allows the company to spread ownership of the Singapore hub across both jurisdictions.

The hub is 58 per cent owned by BHP Australia, and 42 per cent by BHP United Kingdom.

The BHP-Mitsubishi partnership is capable of mining more than 50 million tonnes of coal used to make steel annually from eight mines, making it Australia's largest producer.