Min­ers fear gold roy­alty hike

The West Australian - - WESTBUSINESS - Stu­art McKin­non

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.

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