Gold royalty rise 'risks global investment in WA'
Senior gold mining executives have warned the State Government that any move to increase royalty rates risks international investment in the industry.
Speaking at the Paydirt gold conference yesterday, Norton Gold Fields managing director Dianmin Chen said he believed his company's Chinese parent, Zijin Mining, may review its investment destinations if the royalty was raised.
The gold industry is mobilising to oppose any move to review the existing gold royalty of about 2.5 per cent of its mined value.
The Government launched a review of the royalty regime last year and has confirmed the gold rate would be considered. No changes are expected in the May Budget but forward estimates show the review is expected to collect another $180 million a year from 2015-16, which is about the amount likely to be collected if the royalty was 5 per cent.
But commodity prices have tumbled since the review was announced and the gold industry is collecting cash for an aggressive campaign to oppose any additional impost.
Newmont Mining Asia Pacific external relations boss Kelvyn Eglinton said while a royalty hike would not threaten its Boddington or Jundee mines, doubling the rate would eat into thin margins.
"We think we need to be talking about operating margin," he said. "We've put out some guidance that our WA costs are about the $1190 an ounce mark. On today's spot gold price that's about a $102 margin - and any doubling of the royalty rate will be about $30/oz. That's the sort of impact we face."
Mr Eglinton said Newmont spent $1.1 billion keeping its WA mines running each year, including payroll of $240 million. He said WA was already an expensive jurisdiction for gold miners.
Speaking earlier in the morning, Department of Mines and Petroleum director-general Richard Sellers said it was not his view that royalties should be increased but played down the likelihood that a new system based on operating margins could be introduced.
