Wednesday 27th Sep, 2017

Miners revolt over WA gold royalty hike

Gold ingot. Photo: Public Domain
Gold ingot. Photo: Public Domain

WA Treasurer Ben Wyatt has conceded the proposed plan to raise gold royalties isn’t popular in the Goldfields region, but says the move is necessary to keep the state’s budget balanced.

Wyatt and mines and petroleum minister Bill Johnston announced a tiered royalty rate for gold will be introduced in the western state from January 1, 2018, which will raise an estimated $392 million in additional revenue over the forward estimates.

The news was met with major opposition from gold miners, who say they still operate in a highly-competitive, low-margin sector, despite the high price of gold.

“There’s a lot of marginal operations in this state,” Northern Star Resources executive chairman Bill Beament reportedly told ABC.

Northern Star is reconsidering a planned $50 million investment into the WA School of Mines’ Kalgoorlie Campus over the royalty hike.

“We don’t have a high-margin industry here, the gold price has tracked up, but costs have gone up along with it,” Beament was quoted as saying, citing prohibitive exploration costs.

“In one of my mines alone, the drill database for the last 20 years has more drilling metres in it than the whole of BHP’s Pilbara iron roe division in the last 50. It gives you an idea of how much expenditure we need to put into the ground, just to be able to replace our resources and reserves.”

The government’s plan will raise gold royalties from 2.5% to 3.75% from January 1, a margin Treasurer Wyatt discussed with the industry at a meeting in Kalgoorlie-Boulder.

“I’m not expecting people to warmly embrace me for this decision,” he was quoted as saying by the ABC. “If we can have a sensible conversation around it, I think people understand it’s actually fair.

“What we’re seeing at the moment is a gold price not just at record highs, but expected to stay at this level for quite some time. There will obviously be fluctuations along the way, but at $20 out of $1,700 per ounce, I’m fairly relaxed about any impact on exploration.”