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Australian miners dig in over increase in royalties

The resources industry is ramping up pressure on the NSW government to rule out a Queensland-style increase in royalties.

A coal truck is loaded at BHP Billiton's Mt Arthur coal mine in Muswellbrook, NSW. Picture: Ian Waldie/Getty Images
A coal truck is loaded at BHP Billiton's Mt Arthur coal mine in Muswellbrook, NSW. Picture: Ian Waldie/Getty Images

The resources industry is ramping up pressure on the Perrottet government to rule out a Queensland-style increase in royalties, as research reveals 35 mining projects worth more than $13bn are at various stages in the NSW planning system.

Miners have doubled down on attacks on the Palaszczuk government over its move to increase taxes on the mining industry, a broken election promise that provoked an unprecedented warning from the Japanese ambassador that Japanese companies were now questioning whether Queensland was a safe place to invest.

Queensland’s decision to hike coal royalties from 15 per cent to 40 per cent, aimed at adding at least $1.2bn to state coffers, was a “bolt from the blue” that “sent shockwaves through Tokyo”, ambassador Shingo Yamagami said. “It could have implications beyond Queensland or the coal industry, affecting Japanese investment in joint ventures such as hydrogen hubs,” he said.

Japanese ambassador Shingo Yamagami. Picture: Nigel Hallett
Japanese ambassador Shingo Yamagami. Picture: Nigel Hallett

The increase in royalties in the June state budget, amid ­record-high coal prices, met a backlash from mining companies, with BHP announcing it was pausing new investment in Queensland because of the rise.

“In the ‘mining’ State of Origin, NSW just went 1-0 against Queensland,” NSW Minerals Council chief Stephen Galilee said after the Palaszczuk government announcement.

With a NSW election less than six months away, the state’s mining industry is keen to lock in its advantage over Queensland but is wary of more broken election commitments. “Imposing a Queensland-style royalty increase in NSW would only deliver a short-term revenue gain, while inflicting great damage to the reputation of NSW as a place to invest,” Mr Galilee told The Australian on Sunday.

“Mining royalty payments in NSW are already at record levels, reflecting strong commodity prices. Mining royalties are just one of many taxes paid by mining companies as well as corporate tax, payroll tax, land tax and many other fees, charges and levies, and coal royalty rates in NSW are already double those for other minerals.”

Mr Galilee accused the Palas­zczuk government of “a reckless decision placing investment in mining in Queensland at risk, threatening jobs for miners and supply businesses particularly in regional areas”.

“Any similar new tax burden in NSW would put us at a competitive disadvantage, threatening investment, jobs and economic stability,” he said.

Queensland mining tax hike sent ‘shockwaves through Tokyo,’ says Japanese Ambassador

The Queensland government is trying to attract Japanese businesses and investment to develop a hydrogen industry but the rise in coal royalties has damaged Tokyo’s faith in the state as “safe and profitable”, Mr Yamagami said. “The future of the successful partnership between Japanese businesses and Queens­land, as a competitive investment destination, could be at great risk. ”

Japan has overtaken China as Queensland’s biggest export destination, with $19bn worth of commodities sold in the past year. It was an increase of $11.5bn from the year to May 2022.

An analysis by the NSW Minerals Council identified 35 mining projects in planning and development in NSW, up from 28 in 2018, and 32 in 2021 and 2022. Fifteen projects were for new metals and minerals mines, reflecting increasing global demand for gold, silver, copper, cobalt and zinc.

“In particular, technological advances in industries such as telecommunications, medicine,

manufacturing, defence, renewables, and energy storage are driving demand for critical metals and minerals,” Mr Galilee said.

The projects would create or maintain almost 21,000 direct construction and operation jobs and deliver almost $4bn in ­royalties for NSW, the council calculated.

Coal continues to be NSW’s most valuable export commodity, worth around $22.6 billion in exports and providing $4 billion in royalties – the highest on record. The number of coal projects in the pipeline has remained relatively steady at 17, down from 19 in 2021.

Asked by The Australian whether the NSW government could guarantee no increases in mining royalties, including in its next term in office should it be re-elected at the March election, Deputy Premier and Minister for Regional NSW Paul Toole said the 2022/23 state Budget “did not include plans to alter coal royalty rates.”

“The NSW Government used the Budget to invest in growth of the critical minerals and high-tech metals sector which represents the future of mining, with significant flow-on benefits for other industries and regional communities,” Mr Toole said.

A spokesperson for NSW Opposition leader Chris Minns said: “We have no plans to increase mining royalties.”

Read related topics:Dominic PerrottetNSW Politics

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Original URL: https://www.theaustralian.com.au/nation/australian-miners-dig-in-over-increase-in-royalties/news-story/5e856c60dcc5c1e74956c4c596020f44