The industry is warning that sovereign risks in Australia are increasing.

BHP (ASX:BHP) has long opposed the labor law (Same Job, Same Pay) enacted by the Australian government, arguing that it is necessary to pay inexperienced workers the same wages as workers with decades of experience, which affects costs and productivity.

In its fiscal year 2024 earnings announcement made on Tuesday, BHP stated that the ongoing regulatory changes in Australia are increasing the company's labor costs and reducing the international competitiveness of the Australian economy.

After the earnings announcement, BHP CEO Mike Henry told reporters that it is premature to quantify the costs to the business.

We have always strongly supported linking wage increases to productivity improvements.

Our concern about recent changes is that they have a direct impact on costs without providing a corresponding positive effect on productivity.

With this new law, the re-unionization of large-scale mining workers in Western Australia is being attempted, and Henry warned that if successful, it could have an impact on future expansion of the iron ore business.

Last week, Australian Environment Minister Tania Plibersek vetoed the tailings dam for the $1 billion Australian dollar ($680 million80 million) McPhillamys gold mine development planned by Regis Resources (ASX: RRL) in New South Wales, making the project unsustainable. The company suffered a $130 million30 million blow.

This project, located on freehold agricultural land, had received approval from the Independent Planning Commission (IPC) of New South Wales and federal approval under the 1999 Environment Protection and Biodiversity Conservation Act (EPBC) in March 2023.

The only outstanding approval in this project was under section 10 of the 1984 Aboriginal and Torres Strait Islander Heritage Protection Act, which Regis had been pursuing for the past 4 years.

The Orange Local Aboriginal Land Council (OLALC), the main local Aboriginal representative body, submitted that any risks to cultural heritage could be mitigated in the IPC process.

"Regis was confident, from a regulatory standpoint, that the McPhillamys project was an approved project with no significant issues from the government," said Regis President Jim Beyer to analysts and the media.

"In particular, considering the extensive investigations into Aboriginal cultural heritage that had already taken place, this decision was not in line with past precedents.".

This declaration has also been condemned by industry groups.

This decision has shocked the Australian mining industry and has been making headlines in major media for over a week.

Australia's reporting season is in full swing, and this issue has been repeatedly raised, including BHP's Tuesday.

When companies like BHP make decisions, they are seeking the best risk-return profile, and uncertainty generally means higher risk.

BHP strongly supports policies on cultural heritage protection and is committed to it as a business.

Stuart Tonkin, CEO of Northern Star Resources (ASX: NST), said that Australia has a proven track record as a stable investment destination.

Such gradual changes only take away part of its shine, and if Australia is not the optimal region for capital to invest in, capital will flow to other countries.

Returning to the Fraser Institute's indicators. Australia ranks very high. It is important to understand the reasons for this and how to maintain it to attract investment.

Even companies like Patriot Battery Metal, which are conducting development projects outside of Australia, are listening to concerns from investors.

When speaking to investors in Australia after the preliminary economic evaluation of the Shaakichuwanan Lithium Project in Quebec was announced last week, the company was asked if similar things could happen in Canada.

While Ken Brinsden, the CEO, is confident that such a thing cannot happen, he expressed surprise at the recurrence of this issue.

He said, "It is unbelievable that such a conversation is happening in Australia."

Australia's mining sector has already issued warnings about the potential negative impacts of federal environmental law reforms.

The 'Nature Positive' reforms include the establishment of the national Environmental Protection Agency (EPA) in addition to existing state and territory environmental protection agencies.

The bill was submitted to the federal congress in May, and the government promised to become a "tough police officer" with the ability to issue a "work stoppage" order by the EPA to prevent serious environmental damage and actively audit companies.

Industry groups have warned that this move could lead to regulatory duplication and increase the cost and time required to obtain approval for new projects.

Tania Constable, CEO of the Minerals Council of Australia, said at a meeting held in May, "Australia's environmental policies are like a joke."

"I don't understand what will be added in terms of the national environmental protection agency producing better environmental outcomes when there is already a state environmental protection agency."

Paul Flynn, CEO of Whitehaven Coal, was quoted by an Australian newspaper last week as saying that this change is only "in the back of their minds" for the company.

He said that Regis' decision is only one of various policy issues that are of concern to the industry.