off nearly 12.5% today, page-5

This didn't help.

Coal miners' shares have dropped after NSW said it will raise coal royalties from next year to shore up its sagging finances.

The state government, in releasing new budget measures on Tuesday, also said it would no longer allow coal-miners to deduct transport costs from the royalty calculation.

From January 1, royalties will rise to 8.2% for open cut mining, from 7% now; to 7.2% for underground mining, from 6%; and to 6.2% for deep underground mining, from 5%.

The move comes against the backdrop of slumping prices for coal, but analysts said it shouldn't have a major impact on miners.


"The new levy won't be a big burden to miners in terms of total impact to cost base. Although coal prices have fallen, the weakening in the Australian dollar has actually helped to offset the impact,'' said a coal analyst who declined to be identified because he was not yet authorised to speak to the media.


Still, independent coal producers' shares fell after the announcement. Felix Resources slumped 14.5% to $9.65, while Centennial Coal fell 1.6% to $3.15 and Gloucester Coal lost 5.9% to $4.30.

NSW's imposition of higher coal royalties follows a decision by the Queensland state government in June to raise the coal levy to 10% from 7%. It also comes at a time when commodity prices have fallen sharply and demand from China is moderating.


The prices of thermal coal exported from Australia, a benchmark for Asia, has fallen by almost half from a record of $US0201 a tonne in July to hover at about $US105 on Tuesday, but is still up about 10% compared to the start of the year.

Coal dominates the NSW, accounting for about 75% of the state's mining income and about 20% of its export income. The state exported about 130 million tonnes of coal last year, of which 80% was thermal coal that is mostly used for power generation.

The NSW government released the new measures after an economic slowdown and big drop in tax receipts forced it to revise its budget for the year to June 2009.