"There's been a significant increase in the sovereign risk associated with Queensland," BHP chief executive Mike Henry told reporters on Tuesday.

"Which has caused us to say, 'Well, we really can't deploy further capital into that business for the time being'."

BHP had sought approval for the Blackwater South project despite investor concerns it could become a "stranded asset" amid the global push by companies and governments to cut carbon emissions.

The BHP boss was quizzed on coal expansion during the global media call that followed the release of a record financial result for 2022 and a bonanza for shareholders.

Mr Henry said regulatory processes to get approval should never be seen as approval for a decision to invest.

"It gives you the option to make a decision to invest," he said.

"Since then we've had changes to the Queensland royalty regime that were quite sudden and didn't involve any engagement with industry.

"We'll go back and reassess what the plans for the business are going forward."

BHP's existing Blackwater operation is one of nine metallurgical coal mines in Queensland's Bowen Basin.

The current mine, southeast of Emerald, extracts thermal coal used by power plants and metallurgical coal for making steel.

The royalties paid by mining companies to the Queensland government were changed in June and will rise with the price of coal, as much as tripling the tax for top output.

For BHP, metallurgical coal is part of industrial change needed for a move to net zero emissions.

"Longer term we see the steel industry moving towards green steel," Mr Henry said.

"This is going to be a multi-decade process. In the meantime steelmakers still have to decarbonise."

One of the levers available to them is to move to higher quality metallurgical or coking coal to cut emissions in the blast furnace process, he said.

BHP is focusing on building a portfolio of higher quality coking coal that he said has "upside" in a faster decarbonising world.

They are also working with steelmakers and investing in technology to reduce the carbon footprint.

"It's going to take some time to make them economic and deploy them at scale," Mr Henry said.

He also said much more cooperation was needed for Australia's planned expansion of critical minerals.

"We're supportive of the approach," he said.

But unlike in iron or coal - where geographic and geological advantage combined with high quality mines close to ports and markets, and with easier to reach surface deposits - critical minerals will be harder, Mr Henry said.

It is going to require a much sharper focus by industry and government on stable fiscal settings and competitiveness, he warned.

"We think there's a really attractive opportunity there but it's going to require all stakeholders to come together to make it the case," he said.

Australian Associated Press