Western Australia’s gold sector is rallying against a potential increase in royalty rates, saying such a move would significantly hurt country towns as well as local producers of the precious metal.
Western Australia’s gold sector is rallying against a potential increase in royalty rates, saying such a move would significantly hurt country towns as well as local producers of the precious metal.
The state government announced in August it was reviewing the WA’s mineral royalty rates system, which currently applies a 2.5 per cent royalty to gold producers.
The state budget, also released in August, showed the government expected to earn an additional $180 million in royalties from 2015-16 as a result of the review.
Premier Colin Barnett told parliament late last month he believed the gold royalty rate to be “light on”, sparking widespread concern a royalty hike was in the government’s sights.
Industry participants announced today the Gold Royalties Response Group had been reformed to rally against any potential increase.
The GRRG was initially established in 2010 after the state government flagged a similar proposal.
Current members include Evolution Mining, Gold Fields, Newmont Asia Pacific, Northern Star Resources, Norton Gold Fields, Ramelius Resources, Regis Resources, Silver Lake Resources and St Barbara.
Spokesperson for the group and managing director of junior gold producer Doray Minerals, Allan Kelly, said any increase in gold royalties would have significant adverse impacts on local miners and resources-reliant country towns.
“With low margins already hurting the industry, and a series of closures and redundancies in the past few months, a royalty increase would further impact local communities including Kalgoorlie, Southern Cross, Meekatharra, Westonia and Mt Magnet through additional job losses and cuts to valuable services,” Mr Kelly said.
“It would also seriously undermine future investment in the industry against a backdrop of major companies exiting gold projects in Western Australia."
Global research released today by JP Morgan shows most WA gold mines are among the top 50 per cent most costly operations worldwide.
The research compared cash costs at more than 160 gold mines around the world, which account for more than 50 per cent of worldwide production.
JP Morgan said around 1.4 million ounces, or 30 per cent of WA’s total gold output, is currently being produced at costs above the spot price of gold, which is currently hovering around $1,400/oz.
A further 1.4 million ounces are being produced at break-even costs, the research said.
Mr Kelly said the GRRG was currently preparing a submission for the public consultation period of the royalties review, which is open until the end of the month.
