Liberal party blocks Western Australia gold royalty hike

PERTH (miningweekly.com) – The Western Australian gold sector has welcomed a decision by the Liberal party to block a proposed increase in gold royalties in Parliament.

Following a protest by representatives from the gold industry earlier in the day, the Liberals joined other opposition parties in their vow to block Labor’s plans to introduce a 50% increase in gold royalties.

Opposition leader Mike Nahan was quoted by the ABC as saying that the decision to block the royalty hike was based, primarily, on projected job losses.

"This royalty increase would have imposed a significant risk to jobs in the industry," he said.

The proposed royalty increase was intended to take effect from January 1 next year, increasing the royalty rate from 2.5% to 3.75% when the gold spot price was above A$1 200/oz. Based on the current gold price, the increased rate equates to an additional royalty of about A$20/oz.

However, the gold industry has warned that an estimated 3 000 jobs would be lost as a result of the higher royalty rate.

The Western Australian Chamber of Minerals and Energy (CME) has warned that, at current gold prices, five operating mines with margins of less than 10% could close and that if the gold price declined to A$1 400/oz, a further five operations could be faced with closure, with a further 2 000 jobs at risk.

The CME on Tuesday welcomed the decision by the Western Australian Liberals, with CEO Reg Howard-Smith saying the decision was a win for common sense.

“Our Western Australian gold industry makes a very significant contribution to the Western Australian economy, through direct employment, purchasing of goods and services, community contributions and payments to government.

“Our modelling clearly showed the direct and flow-on economic impacts of this proposal were too much to bear. The reality is there are gold mines which are too marginal to absorb the 50% increase in costs, and jobs would have been lost.”

The Association of Mining and Exploration Companies has also welcomed the decision, with acting CEO Graham Short saying that not only would the abolishment of the proposed royalty hike save thousands of jobs in the industry, it would also save mineral exploration and the wider service industries.

“It makes no economic sense that the Western Australian government would want to damage one of the engine rooms of our economy by hitting it with a 50% increase in a major cost, when that only represents 0.2% of the 2017/18 revenue Budget,” Short said.

“How is that Budget repair when 60% of the revenue raised will go to Canberra and be redistributed through the goods and services tax process?”

“The Liberal, National, One Nation, Shooters and Fishers, and Liberal Democrats have stood up to save jobs in the industry and wider community. They should all be individually congratulated for having the foresight in recognising the significant economic and social impact the royalty hike would have had on the industry, as well as numerous small businesses, contractors and service providers,” Short said.