Miners fear gold royalty hike
Speculation is mounting that the cash-strapped State Government is set to whack WA’s gold mining industry with a royalty hike in next week’s State Budget.
Questioned yesterday about a possible rise in the 2.5 per cent production royalty the State’s gold miners currently pay, Premier Mark McGowan noted that they were not covered by State Agreements, unlike the big iron ore miners.
“Outside of State Agreement Acts, governments can make decisions so we will hand down our Budget next week,” he said.
He also warned that while the WA economy was showing signs of recovery after the mining downturn, the financial position remained dire.
Last week, the Chamber of Minerals and Energy said it would strongly oppose any increase, after rumours that the industry could be slugged in the name of Budget repair.
CME acting chief executive Nicole Roocke said yesterday raising royalties on gold miners would be counterproductive because any extra revenue raised would be redistributed to other States through the GST.
She noted the gold exploration industry was only now starting to show “green shoots” after a tough few years.
Under WA’s royalty system, gold miners pay a rate of 2.5 per cent on production, which raised $238 million in 2015-16. A review by the previous Barnett government recommended the rate be lifted to 3.75 per cent, in a move Treasury assumed would raise $180 million from 2015-16, or $560 million over three years.
However, the measure was abandoned by the government in the face of intense lobbying by the gold industry.
Intermin Resources managing director Jon Price said any lift in gold royalties would be a risk to jobs, investment and exploration.
“Because it’s a revenue-based royalty, it can mean the difference between a project being economic and non-economic,” he said.
“It would just be an add-on to the red tape and high-cost burden the industry already faces. I think the Government would be shooting itself in the foot to even entertain it.”
Melbourne analysts Surbiton Associates last week warned against government intervention in the gold industry after national production hit near historic highs in 2016-17.
Australia’s gold producers turned out 9.6 million ounces or 299 tonnes last financial year, up 2.5 per cent on 2015-16.
Surbiton Associates managing director Dr Sandra Close said about 70 per cent of Australia’s gold was mined in WA.