By ERWIN CHLANDA
The mining industry is issuing dire warnings after NT Treasurer Nicole Manison (pictured), reacting to billion dollar cuts in GST revenue, announced a “hybrid royalty scheme to ensure all operating mines in the Territory pay a minimum royalty”.
She says from July 1 next year the new scheme requires mining companies to pay the greater of the existing 20% profits-based scheme, or a value-based royalty on their gross mineral production revenue at a rate of:-
• 1% in a mine’s first mineral royalty year on or after July 1, 2019;
• 2% in the second mineral royalty year, and
• 2.5% in the third and following mineral royalty years.
“This massive royalty increase will be an absolute disaster for the Northern Territory economy,” says Warren Pearce, of the Association of Mining and Exploration Companies.
“This decision immediately threatens the viability of $6b of new mining projects, that would have delivered 4,000 new jobs and hundreds of millions in new royalty revenue for the Government.
“Many of these mining projects will simply no longer go ahead.
“At a time when the Northern Territory desperately needs industry investment to stimulate the economy and create jobs the Government has effectively taken the decision to close the door on investment.”
UPDATE 11:40am
Drew Wagner, of the Minerals Council of Australia NT Division, says if this 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 … its review will likely put future investment and jobs at risk.
“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.”
Monday, November 18, 2024
The freedom of the press still furnishes that check upon government which no constitution has ever been able to provide – Chicago Tribune.
As Mandy Rice-Davies said “well, they would say that, wouldn’t they”.
This is ridiculous. How about we stop messing around with these new mining companies and their modus operandi? This is just the start of a downward decline for the NT’s independence.
Let’s follow the lead of New Zealand. Just last week:
“The Prime Minister of New Zealand, Jacinda Ardern, has announced a ban on new permits for oil and gas exploration. Prime Minister Ardern said that existing exploration and mining rights would be protected; but that the new restriction was part of a just transition to a clean energy future.”
She said that the coalition parties were “striking the right balance for New Zealand – we’re protecting existing industry, and protecting future generations from climate change”.
The unfairness lies not in a profit tax but. the value-based royalty on their gross mineral production revenue.
Take TNG’s proposed new mine at Mt Peake.
Three year construction period, at least five years of operation to cover costs of construction of $800m.
So for five years and probably more when the company will make no profit it will pay the tax.
So will TNG not be able to get finance for the mine because of this impediment and the NT will lose 300 potential jobs and at least $150m spent on local businesses?
Mining companies are like the banks. No one cares when they claim to cry poor. They are just greedy.
Shares in Arafura Resources, the miner trying to start a new mine to the north of Alice Springs, dropped 9% today.
The chance of Arafura getting finance for the mine has been all but destroyed by this new royalty.
A lot of small investors, many of them Territorians supporting the NT, will lose their shirts.