ASX coal shares have, as a whole, been riding high on the back of record thermal and coking coal prices.
Coal prices were already high by historic standards heading into 2022. This came as supplies were unable to match soaring demand, following years of limited investment in exploration and new project development.
Russia's invasion of Ukraine and the resulting sanctions on energy rich Russia put further upward pressure on energy prices, seeing coal trade at all-time highs.
As you'd expect, that's been a welcome tailwind for ASX coal shares.
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How have ASX coal shares been tracking?
While the All Ordinaries Index (ASX: XAO) is down 15% in 2022, New Hope Corp Ltd (ASX: NHC) shares have gained 43% while the Whitehaven Coal Ltd (ASX: WHC) share price is up 74%.
As for ASX coal share Stanmore Resources Ltd (ASX: SMR), it's up a whopping 103% year-to-date, spurred by a 10% intraday gain today.
That gain comes after Stanmore Resources CEO Marcelo Matos expressed his displeasure at the new coal royalty tax increases announced by the Queensland government.
Stanmore share price flying higher after CEO speaks his mind
After amending the coal royalty regime as part of Queensland's 2022-23 budget, Stanmore noted that coal producers in the state will be paying the highest royalties in the world.
For prices less than $175 per tonne, royalties will remain unchanged.
For higher prices, the following three new royalty tiers were introduced:
- 20% for prices above $175 per tonne
- 30% for prices above $225 per tonne
- 40% for prices above $300 per tonne
Matos was less than pleased.
According to Matos:
Stanmore is very disappointed with these extraordinary tax increases given its commitments to the Isaac Downs Project and re-opening of the Millennium and Mavis mines, as well as the very recent and significant US$1.2 billion investment in the Queensland coal sector with the acquisition of our 80% in BMC.
Royalty rates in Queensland were already among the highest in the world prior to these increases and come at a time when the Queensland coal industry was just recovering from the losses experienced during the market downturn in 2020 and 2021.
The increases to the royalty rates without formal notice or consultation with the industry are unprecedented. The impact of these increases will be felt the most by workers and suppliers in regional Queensland communities that underpin the resources sector and make it Queensland's largest export industry.
If ASX coal shares need to pay more money into government coffers, investors may well feel the pinch in the form of lower dividend payouts down the road.
