Gold miners to take hit as WA government breaks royalties promise

WA’s gold miners will cop a 50pc hike in gold royalties under new measures announced in the state’s budget today.

An explosion at the Mount Magnet gold mine in Western Australia owned by Ramelius Resources. (Supplied)

Western Australia’s gold miners will cop a 50 per cent hike in gold royalties under new measures announced by the state’s government today.

Treasurer Ben Wyatt revealed that the state’s gold producers would pay a 3.75 per cent royalty, up from the existing 2.5 per cent, as part of efforts to bring the state’s budget back under control.

The state’s gold miners will also be hit by a hike in payroll tax, which will apply to the biggest 1,200 or so companies in the state.

Mr Wyatt said the measures were likely to cost the miners an extra $20 per ounce of production, and will deliver the state an additional $392 million in revenue over the forward estimates.

The measures will be felt across the Australian gold sector, with all the country’s major gold miners having operations in WA. The state’s biggest gold producers include international heavyweights Newmont Mining, Gold Fields and AngloGold, as well as Australian-listed miners such as Newcrest Mining (NCM), Evolution Mining (EVN), Northern Star Resources (NST), Regis Resources (RRL) and Saracen Mineral Holdings (SAR).

The gold royalty hike represents a broken promise for WA premier Mark McGowan, who while in opposition had strenuously argued against the exact same royalty rise when it was proposed by then-premier Colin Barnett.

He had previously argued that an increase in gold royalties would force mines to close and would deliver little to no benefit to the state as any extra revenue was lost under the GST redistribution process.

“I acknowledge that for large corporations and gold miners we will be forced to breach the commitments we made before the state election,” Mr McGowan said on Thursday.

“We are sorry about that. I am sorry about that.”

Mr Wyatt told The Australian the state expected that around 60 per cent of the extra revenue from the gold royalty hike would be lost under the GST redistribution method.