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.”
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.”
By ERWIN CHLANDA