The state government has opted not to change commodity royalties in this year’s budget at the expense of almost $180 million in previously booked revenue.
Mines and Petroleum Minister Bill Marmion made the announcement today after tabling the much-anticipated Mineral Royalty Rate Analysis report in the state’s lower house.
The three-year review made 18 recommendations, including the introduction of a new tier of royalty at 3.75 per cent that would include gold, uranium and alumina.
That would compare with a current rate of 2.5 per cent for gold, 1.65 per cent for alumina and 5 per cent for uranium.
Mr Marmion said the government had no intention of changing royalties, however.
He emphasised the need for stability in royalty rates, saying that changing the rates would contribute to sovereign risk.
“People make decisions based on what the rules are (at the time),” Mr Marmion said.
Nonetheless, the minister said it had been a useful exercise.
“I believe it is the state government’s responsibility to periodically review the royalty system and confirm Western Australians are receiving a fair return for the resources of their state,’’ Mr Marmion said.
“The royalty we’ve had in place has served us well for some decades … as far as we’re concerned the issue is off the table.”
The report did tick off the retention of the ad valorem royalty system, where royalty payments are based on the value at sale, not a set amount, and the current 10 per cent benchmark rate.
Chamber of Minerals and Energy deputy chief executive Nicole Roocke said the decision provided certainty.
“If the government wants to grow their royalties, the best way to do that is to grow the resources sector,” she said.
Doray Minerals managing director Allan Kelly said the Gold Royalties Response Group was pleased with the announcement, noting that the industry employed 20,000 people state wide.
He said the system was fair and competitive.
Mr Marmion flagged ongoing consultation with industry about any future royalties changes.
