By: Jane Goldsmith

April 8, 2015

WA mineral producers have applauded the State Government’s decision to leave mining royalties unchanged in this year’s budget, despite a deep state deficit.

Mines and Petroleum minister Bill Marmion made the announcement after receiving a 155-page review of WA’s royalty system; the third since it was put in place in 1981.

The Mineral Royalty Rate Analysis (MRRA) – jointly conducted by the State Development and Mines and Petroleum departments – made 18 recommendations, including an increased royalty rate for gold miners, from 2.5 per cent to 3.75 per cent.

However, Mr Marmion rejected the recommendations, and confirmed the current rate would remain.

“The State Government notes the review’s endorsement of the ad valorem system and the 10 per cent benchmark of mine-head value as an appropriate gauge for royalty returns to the community,” he said.

“The review’s 18 recommendations are also noted. However, I can confirm that there will be no changes to royalty rates in this year’s budget.”

State gold and mineral lobbying groups welcomed the announcement after months of rallying against the increases.

“We are delighted that Minister Marmion has taken this issue off the table,” Gold Royalties Response Group spokesperson Allan Kelly said.

“Our members are confident that this decision will be a much needed boost and will provide investors and companies with the certainty they need to make investment decisions. It will also be welcomed by our workforces and the suppliers and regional communities which depend on our industry for their livelihoods.”

Mr Kelly said the MRRA was completed across particularly tough conditions, including volatile gold prices and high operating costs.

“Today’s decision demonstrates the government understands that the gold industry plays a critical role in keeping our economy and our community strong,” he said.

“It is also clear the government knows that our industry is doing it tough in a highly competitive global market.”

Association of Mining and Exploration Companies chief executive Simon Bennison said the development was within the best interests of “thousands of workers, contractors, suppliers and investors, who would have been badly affected”.

“It is clear from the [MRRA] report… that the current system is working and that the government has clearly understood that the status quo should be maintained in line with industry’s recommendations. This is a huge relief,” Mr Bennison said.

“We congratulate the government and particularly the minister for showing common sense and the foresight in keeping the status quo. The government has clearly listened to industry and community concerns that there would have been massive unintended consequences if rates had been increased.”

In last year’s budget the Barnett Government forecast $180 million would be raised during the 2015-2016 financial year and $187 million in 2016-2017 from royalty revenue, which it had attributed to the royalty review.

Mr Marmion noted the decision not to increase royalty rates would impact these forecasts, however, he pledged to consult the industry regarding any future royalty discussions.