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Japan complained to Australia after the state of Queensland, one of the world’s biggest sources of coal and other resources, shocked miners with a steep hike in coal royalty rates to capture windfall profit, Japan’s embassy said on Thursday.

Japan has informed the new Labor government about its concerns and Japan’s consul-general in Queensland, Masuo Ono, has raised the issue with the Queensland state government, the embassy said in e-mailed comments to Reuters.

In unusually strong words, Japan’s ambassador to Australia Shingo Yamagami on Wednesday raised “great concern” about the Queensland government’s hike in coal royalty rates in June, a move made without consulting the mining industry after a 10-year freeze.

“Make no mistake, this is a huge shock for Japanese companies,” Yamagami said in a speech at the University of Queensland.

The top rate was set at 40% for coal over A$300 a tonne, far above royalty rates anywhere else.

“The future of the successful partnership between Japanese businesses and Queensland, as a competitive investment destination could be at great risk,” the ambassador said.

Japanese firms Mitsui & Co Ltd, Mitsubishi Corp and Idemitsu Kosan Co Ltd all have major coal investments in Queensland and are looking at new investments in minerals, hydrogen and renewables, which he said would require mutual trust with the state government.

He said some Japanese companies were already questioning whether Queensland would be a safe, predictable place to invest.

“I fear that this may have widespread effects on Japanese investment beyond the coal industry,” Yamagami said.

A Queensland government spokesman said the state was committed to working closely with Japanese partners in existing and new industries, as it has over decades, a message reinforced in a recent trip to Japan by the state’s deputy premier.

“That relationship has withstood previous increases to coal royalties in 1995, 2001, 2008 and 2012,” a government spokesperson said in emailed comments on Thursday.

Analysts said the ambassador’s comments were unusually blunt for a Japanese diplomat but reflected investors’ need for fiscal stability.

“It was unusually sharp commentary from that stakeholder, but it is reflective of the severe lack of planning and engagement with the industry ahead of the tax change announcement,” said Credit Suisse analyst Saul Kavonic.

“There’s been a dramatic increase in questions about tax stability in Australia by investors globally in the wake of that announcement,” he said.

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