AREEA has joined industry groups in questioning why the Northern Territory would jeopardise investment by imposing a royalty hike on miners.
The plans were revealed by Northern Territory Treasurer Nicole Manison as part of the upcoming state budget plans.
Under the proposal, a revised royalty system including a proposed hybrid system of both value-based and profits-based elements would be slapped on the minerals sector in the Territory.
The new proposals, which are set to start from July 2019, will require mining companies to pay whichever is the greatest amount out of 1% of a mine’s first mineral royalty year, 2% in its second royalty year, and 2.5% in the third and following royalty years.
AREEA Head of Policy and Public Affairs Tom Reid said “shifting the goal posts on taxation” is not condusive to luring future international mining investment.
“Capital is mobile and it’s a reality that investment is prioritised to areas where there are lowers costs,” he says.
“We need policy stimulating the resources and energy sector – not policy driving away investment, and the associated jobs and economic growth. This move is especially disappointing given the Territory only recently lifted its moratorium on coal seam gas extraction techniques in a sensible, forward-thinking policy decision.”
Association of Mining and Exploration Companies (AMEC) CEO Warren Pearce said the major changes to the mineral royalty regime will be disastrous for the Northern Territory economy.
“This decision immediately threatens the viability of $6 billion of new mining projects that would have delivered 4,000 new jobs and hundreds of millions in new royalty revenue for the Government,” he said.
“The mining industry in the Northern Territory was finally showing signs of recovery. This massive royalty increase will put an end to the economic recovery before it begins.”
Minerals Council of Australia NT Division, Executive Director, Drew Wagner said if the royalty system is adopted in full the Territory would be the only mining jurisdiction globally to have such a mechanism.
“While the Minerals Council acknowledges the efforts from Treasury to consult industry over the review of the royalty system, regrettably the outcome of its review will likely put future investment and jobs at risk,” he said.
“It will add uncertainty and complexity and will further damage the NT’s attractiveness as an investment destination by hitting mining operators with more onerous royalty arrangements than in comparable jurisdictions around the world.”
