At present it seems Chinese and others have been known to manage...

At present it seems Chinese and others have been known to manage prices through internal redistribution and stockpiling. Prices are low, but not low compared to the distant past. Low volume, high cost producers will drop off first and contribute to lower supply. Bowen CC probably produces less than 1 million tonnes of met coal. In the medium term larger volume producers who have lower costs of production will have absorbed the royalty cost. Met coal is demand is cyclical. Supply side constrained aided by shutdown of many smaller producers and low capital investment. Bowen CC has mothballed two mines since royalty scheme introduced. In the medium term when demand spikes again the cost of royalties will be passed on to customers by remaining producers with bargaining power. China and Japan have obviously worked this out. Over the long term we will likely see much higher prices at the lower end of price cycles. Re-entry of higher cost, lower volume producers will be feasible again. This could play out in years to come as we still seem to be in the cost curve rationalisation of producers. Short, med and long runs in economics are not clear cut and commonly phase.

This begs the question whether Bowen CC in a loss making position is shovelling away resources, propping up supply to an extent in a low demand environment. If the company is to survive in namesake its current resources will be worth considerably more in the long term. While it is basically giving away resources at a loss or marginal rate it may be prolonging its demise and missing an opportunity in years to come requiring substantial capital to continue mining.

The timing could be bad for the company even though in my opinion royalties will eventually wash through to higher average prices. But not without the demise of unprofitable producers at some stage of the economic cycle.