Queensland resources sector update: budget announcements and recent reforms

By John Hedge
Critical Minerals Energy Hydrogen Mining Oil & Gas

Support for Queensland's resources sector 8 min read

With the handing down of the Queensland budget on 11 June 2024, several key initiatives and funding measures were introduced to support the resources sector in Queensland. These largely focused on supplementing or extending pre-existing initiatives, demonstrating a continuous commitment by the state to modestly support energy transition sectors such as critical minerals, hydrogen and gas.

Significant legislative and policy reforms were also implemented across the sector, addressing diverse issues including financial provisioning, hydrogen transportation, carbon capture and storage (CCS), and royalties. Although it's an election year in Queensland, these initiatives should largely remain in place irrespective of the election outcome.

In this Insight, we explore the key initiatives and funding announced in the budget as well as recent legislative and policy reforms across the sector.

Key takeaways

  • Most of the budget funding for the resources sector was to supplement or extend existing or previously announced initiatives. Yet, in aggregate, it reflects a continued investment by Queensland in providing modest targeted support to energy transition related sections of the resources sector including critical minerals, hydrogen and gas.
  • Of the legislative reforms, the proposed financial provision changes are likely to have the most material impact in the near-term. In particular, the introduction of a new moderate/high risk category with a higher contribution to the financial provisioning scheme fund (than the existing moderate risk category), but without the requirement to provide surety that is imposed on high risk proponents, is hoped to reduce the barriers to new entrants that have arisen due to the difficultly of obtaining bonds from financial institutions (particularly for projects in the coal mining space).

Critical minerals

The budget involves additional funding for existing initiatives in this area:

  • Collaboration Exploration Initiative: an additional $17.5 million of funding is committed for the Collaboration Exploration Initiative, an existing program for grant funding for exploration activities aimed at critical minerals. The previous round involved providing grants of up to $300,000 to 18 different projects, and applications for the next round of funding (round 9) through this initiative are scheduled to open in late 2024.
  • Queensland Resources Common User Facility: the budget includes an additional $2 million in funding to support preparation for the operation of the Queensland Resources Common User Facility to be developed in Townsville (for which $75 million was previously allocated as part of Queensland critical minerals strategy and a lead contractor has been appointed). The intention of the facility is to trial production processes to enable prospective critical minerals producers to produce mineral samples at scale, with an initial focus on being operational for vanadium processing in 2025, with capacity to expand in the future to enable processing for minerals like cobalt and rare earths.
  • While not directly critical mineral related, given that a material portion of Queensland's critical minerals deposits are in the North West Queensland minerals province, the significant funding for electricity generation and transmission projects in that region, such as the CopperString project and Flinders renewable energy zone may assist with the future power needs of such projects.

While there was no additional funding made available for the Queensland Critical Minerals and Battery Technology Fund, it continues to have funding available following the announcement of the first two facilities being made available to a sapphire glass project (manufactured from high purity alumina) and tungsten mining and processing project.


Financial provisioning reforms

In April last year, the Acting Scheme Manager published recommendations regarding reforms to the Qld Financial Provisioning Scheme (FPS). In response to these recommendations and the State's focus areas contained in the Queensland Resources Industry Development Plan, the Mineral and Energy Resources and Other Legislation Amendment Bill (the Bill) was introduced into Queensland Parliament on 18 April 2024. The Bill seeks to enact a number of key reforms to the FPS, several of which were recommendations arising from the Acting Scheme Manager's review.

A key reform is the introduction of a fifth risk category of 'moderate/high'. The 'moderate/high' risk category would see proponents contribute to the Scheme Fund with a proposed prescribed percentage of 6.5% (which is significantly higher than the existing contribution rates for the lower risk categories) but avoid the requirement to provide full surety associated with a 'high' risk category allocation. In addition, it is proposed to also reduce the prescribed percentage for the 'moderate' risk category from 2.75% to 2.25%.

The Bill's explanatory memorandum indicates the introduction of the new 'moderate/high' risk category is to better reflect company risk profiles (based on the Acting Scheme Manager's observations that the current arrangements with less risk categories resulted in complex assessments of profiles that fell 'between' categories, particularly given the material imposition of a higher contribution rate or surety requirement that arises from being allocated to the higher category.

If the proposed amendments are passed, the contribution rates will be as follows:

Risk category Proposed contribution rate
Very low 0.50%
Low 1.00%
Moderate  2.25%
Moderate/High 6.50%
High Surety

The proposed introduction of the fifth risk category which provides for a contribution to the Scheme Fund and thereby avoids a requirement to provide full surety, also appears to be in recognition of the difficultly proponents are having in obtaining sureties. As highlighted in the Acting Scheme Manager's review, the Government is aware of the difficulties industry participants are having in obtaining surety, given the increasing number of banks and insurers implementing ESG fossil fuel policies and the Government will continue to explore alternative options, including possibly the expansion of approved surety providers on a case-by-case basis.

Abandoned mines

A total of $70.6 million has been set aside over four years to improve the health, safety and environmental risks across Queensland's legacy abandoned mining sites.

The Australian Minerals and Exploration Council has expressed hope this is in preparation for potentially bringing some sites back online for exploration (as envisaged as a potential in the State's critical minerals strategy, particularly through reprocessing of tailings).

In that regard, there does not yet appear to have been any further action on the proposal from the State's Critical Minerals Strategy for a residual mineral recovery tenure being introduced to support that type of project.


In the hydrogen sector:

  • Natural hydrogen: the budget includes $4 million to undertake an assessment of the occurrence of natural hydrogen and its production potential in Queensland. Natural hydrogen (also referred to as geologic, gold or white hydrogen) is hydrogen naturally found beneath the Earth's surface. The extraction of natural hydrogen is in the early stages of investigation elsewhere in Australia. For example, in South Australia and the Northern Territory legislative amendments have occurred such that exploration tenure granted under their petroleum legislation can authorise exploration targeting natural hydrogen. The first well in Australia targeting natural hydrogen was drilled in South Australia in late 2023.
  • Green and blue hydrogen: to date the focus of hydrogen projects in Queensland have been based on manufactured hydrogen (principally 'green' hydrogen relying on renewable energy power generation or 'blue' hydrogen relying on coal or gas generated power with carbon capture and storage). Proponents are understood to be negotiating for inputs like strategic port land, power and water. The position on CCS (discussed below) creates a challenge for any blue hydrogen projects in Queensland.
  • Hydrogen pipeline transportation: the Gas Supply and Other Legislation (Hydrogen Industry Development) Amendment Act 2023 commenced on 4 April 2004 providing an approvals pathway for hydrogen to be transported in pipelines. This complements national changes that came into effect on 7 March 2024 through the Statutes Amendment (National Energy Laws) (Other Gases) Act 2023.


The budget contains the previously announced $21 million Frontier Gas Exploration Grants program to fast-track additional future gas supply from fields beyond the regions which are currently in production. That funding has been granted to four coal seam gas projects in Bowen Basin.

The government's support for such new developments is consistent with its periodic release of acreage subject to an Australian market supply condition, with a view to increasing domestic gas supply, with a new release anticipated in 2024.

Carbon capture and storage

The budget includes an additional $1 million to establish the previously announced independent technical expert panel to review safety aspects of greenhouse gas storage for areas outside the Great Artesian Basin. The government's announcement indicates the technical panel will report in 2025.

The State's position on CCS is currently complicated and uncertain given:

  • the principal Queensland CCS project recently being refused approval on the basis of perceived potential for groundwater impacts; and
  • the government following that decision by announcing a ban on CCS projects in the Queensland component of the Great Artesian Basin (with the announcement indicating the ban will be implemented in upcoming legislation).

While that technically leaves CCS still permitted in other parts of the State (subject to existing assessment and approval processes), potential prospectivity for CCS in other areas is far less well known.

Uranium and nuclear

While nuclear power has become part of the political debate at a national level, the Queensland opposition has indicated it will maintain the current government's position of not supporting nuclear power development in Queensland.

Queensland's current position on the nuclear and uranium industries is that:

  • the Nuclear Facilities Prohibition Act 2007 (Qld) continues to prohibit the development and operation of nuclear reactors and uranium processing facilities; and
  • there is an unlegislated government policy of not granting mining leases for uranium, but permitting applications for exploration permits and mineral development licences (with limited exploration expenditure practically occurring as a result of the uncertainty surrounding any future pathway to production).


There were no changes in the budget to Queensland's royalty regime, including maintaining the controversial progressive coal royalties regime.

That was the expected position following the government's introduction in May 2024 of the Progressive Coal Royalties Protection (Keep Them in the Bank) Bill 2024, which prohibits a change to the rates of coal royalty by regulation. That does not practically hinder a future government with a majority in Queensland's single house of parliament making a change, but would require passing an act of parliament and thereby involve some additional level of parliamentary and public scrutiny.

Royalties on other resources can continue to be amended by regulation.

With total resources royalties generating $12.8 billion in revenue in 2023/24, the resources industry's contributions remain critical to keeping the budget in surplus.

Other budget revenue changes

Other budgets measures that will have some impact in the resources sector include:

  • Government fee freeze: with the previously announced fee freeze for State government fees and charges for 2024/25, that would otherwise be escalated for CPI, accounts for $180 million of lower revenue. While part of the broader cost of living measures, the fee freeze will have some minor benefits for the resources industry for fees relating to the various approvals required to operate in the sector
  • Regional payroll tax discount: a change to the regional payroll tax discount regime, so that it no longer applies to regional employers with taxable wages of more than $350 million. While the threshold for loss of the discount has been set at a level which will preserve the discount for nearly all regional employers in the resources sector, media commentary suggests that one major mining company may have lost the benefit of the discount through this change.