Japanese firms may think twice about investing in Australia’s Queensland, one of the world’s biggest sources of coal, after the state shocked miners with a steep hike in coal royalty rates to capture windfall profit, Japan’s ambassador to Australia said. In unusually strong language, Shingo Yamagami raised “great concern” about Queensland’s royalty hike announced 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 on Wednesday. The top rate was set at 40 per cent 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. “Some Japanese companies are already questioning whether Queensland will continue to be the safe and predictable place to invest that they had known for decades,” 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.