Revised gold royalty rate and industry assistance program announced
The McGowan Government has unveiled a revised gold royalty rate coupled with a gold industry assistance program.
This proposal has been developed after listening to the concerns from the gold industry regarding the pressure on jobs and the impacts on the exploration and drilling sector that were raised through the initial gold royalty proposal.
The new gold royalty, which will come into effect from January 1, 2018, will deliver the same tiered rate (an increase from 2.5 per cent to 3.75 per cent), but will only apply when the gold price is above $1,400/ounce, instead of the previously planned $1,200/ounce.
The initiative also includes an assistance package for marginal gold mines.
This assistance package enables marginal miners, having all-in sustaining costs above 85 per cent of the gold price, to be refunded the increased royalty rate paid.
This measure wholly offsets the royalty rate increase for marginal miners, addressing industry claims that jobs could be lost from such operations.
Under the Government plan, operating conditions for marginal gold mines will be unchanged.
Assistance will be in place for a minimum of two years from the commencement of the rate increase.
The Government has accepted industry feedback that medium-sized producers, with production between 2,500 ounces and 10,000 ounces, would have been unduly affected by the changes. As a result the 2,500 ounce royalty free threshold will be reinstated.
Small producers and prospectors that produce less than 2,500 ounces per annum will not be affected by these changes and will continue to be exempt from paying royalties.
The royalty rate increase is expected to generate net revenue of $332 million over the forward estimates to contribute to budget repair.
Treasurer Ben Wyatt said the Government has looked at alternative revenue measures, and has formed the view that this new gold measure is the fairest way to help fix the budget.
“I understand that the gold industry is opposed to any increase in their royalty rate. However, we have listened to their concerns, and have addressed them in a reasonable way, while also ensuring that the industry is contributing towards budget repair.
“I call on the Opposition and the crossbench to take a more constructive view of our revised gold royalty and act in the best interests of the State.”
Mines and Petroleum Minister Bill Johnston said the McGowan Government has heard the concerns of industry and proposed a fair and responsible royalty structure and assistance program.
“The proposed assistance program will ensure no jobs are lost through the implementation of the royalty increase, and with the 2,500 ounce exemption reinstated those funds can be returned to exploration for the sector.
“Western Australia deserves to get a fairer return on its gold assets, particularly from highly profitable operations, and this is a responsible measure to achieve that while securing jobs at marginal operations.
“We’re making tough decisions and all sections of the community must make a contribution, including the gold industry.”