The West

DMP boss hints at gold royalty rise

Department of Mines and Petroleum director-general Richard Sellers has hinted the State Government's royalty review may recommend a staggered increase in gold royalty rates.

But Mr Sellers said it was not his personal view that royalties should be increased during an industry downturn.

Standing in for Mines Minster Bill Marmion at Paydirt's Gold Conference in Perth this morning, Mr Sellers said the said the joint DMP and Department of State Development task force conducting the review was unlikely to recommend a multi-tiered gold royalty system to reflect the differing cost structures and profitability of WA mines.

The State's gold industry has mobilised to oppose any lift in the 2.5 per cent royalty rate on gold production, arguing it would make many WA mines uncompetitive due to the cost environment.

Mr Sellers said one of the aims off the review was to keep the royalty system simple.

"We know it is a very varied industry where you have some very high-cost producers and then some others that have very high grades and produce at a lower cost," he said.

"But the difficulty is that if you tried to design a system that catered for that it would get very complex and very hard. My gut feeling is that it will stay a simple process."

Mr Sellers hinted the review's recommendations could reflect the concerns of magnetite producers, who have long argued they should pay a lower rate than the 5 per cent levied on production of other concentrates to reflect the enormous capital costs of bringing magnetite iron ore projects into production.

"We've only got three royalty tiers at the moment. We've got some industries that are emerging that may not easily fit into those three tiers," he said.

"So if you're a magnetite producer are you the same as a copper concentrate producer? Yet at the moment we've only got one rate for concentrate. So things like that I think might need to be looked at more closely over time."

"But when things are hard it's my personal view that it's not the time to be making great changes to any of the systems."

The West Australian

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