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We're rolled by gold royalty hike, say WA miners


GOLDMINERS in Western Australia are facing a hike in royalty rates of up to 100 per cent, in a move the industry claims could jeopardise smaller projects and discourage investment in the resource-rich state.

Premier Colin Barnett -- who has refused to meet the industry to discuss the planned tax hike -- confirmed yesterday that the WA government was considering raising royalties for gold producers, but said any change would be "very modest".

The changes would be introduced in the state budget in May and could generate up to $150 million a year in extra revenue for the government if applied to all producers.

However, some believe the hike might only apply to the state's smaller miners, with big companies such as Newmont Mining operating under legislated state agreements that are more difficult to amend.

Separately, Mr Barnett is attempting to end the concessional royalty rates on iron ore enjoyed by mining giants BHP Billiton and Rio Tinto for decades at their Pilbara operations.


That move is expected to raise an additional $300m a year to help plug the budget at a time when WA is facing soaring expenses and flat revenues.

Mr Barnett said yesterday he would meet Rio chief executive Tom Albanese "in the next few weeks" to discuss the royalties issue and the proposed BHP-Rio merger in the Pilbara.

The Premier has accused BHP and Rio of failing to engage with the WA government and has not met either Mr Albanese or BHP's Marius Kloppers since last November.

Mr Barnett said he was not surprised to hear of the gold industry's opposition to the plan but it was unfair that goldminers paid a lower royalty rate (2.5 per cent) than producers of other minerals.

"We are looking at royalties in general but any change would be very, very modest if there is any change at all," he said.

"I think it's a fair proposition that mining companies pay a fair and reasonable price in the form of a royalty which is the price they pay to purchase the mineral from the people of Western Australia."

Yesterday, a group of small-cap miners revealed they had formed a lobby group to fight the proposal.

The group includes Avoca Resources, Norton Gold Fields, Silverlake Resources, Catalpa Resources, Crescent Gold, Ramelius Resources, Saracen and Swan Gold Mining.

Silverlake managing director Les Davis said he believed the government was contemplating a royalty increase of between 80 and 100 per cent.

According to the government's most recent forecasts, it expects to collect $155m in gold royalties this financial year.

Despite the lower royalty rate levied on the gold industry, Mr Davis said the sector was "paying more than its fair share".

He said an increase in royalties would have a major impact on the cost of production and on the profit margins for smaller miners.

The Association of Mining and Exploration Companies (AMEC) called on Mr Barnett to consult with the industry over the changes.

"The Premier has made it very clear he doesn't feel he has an obligation to consult with industry -- he has stated that," said AMEC chief executive Simon Bennison.

"So we can only fear the worst at this stage and it would be helpful if the Premier actually put the cards on the table so we could see exactly what we're dealing with."