The Western Australian government on Thursday introduced a phased increase on its royalty rates applying to iron-ore mines, a move it says will create A$1.9bn in additional revenue.
Australia’s Association of Mining & Exploration Companies and the Western Australia Chamber of Minerals and Energy expressed disappointment that the industry had not been consulted and Federal Treasurer Wayne Swan said that WA could end up losing more in GST revenue than it gained in additional royalties.
“In the state budget, the Western Australian government said that iron-ore fines royalties would increase from the current 5,6% to 6,5% from July 2012, and would increase further to 7,5% from July 2013, to equal the royalties imposed on lump iron-ore.
It was envisaged that the additional revenue from the increased royalties would reach A$1,9-billion, with the funds being quarantined for debt reduction purposes. The funds would also be used for the state’s Royalties for Regions component.”
“AMEC chief executive Simon Bennison described it as "yet another unexpected financial impost on iron ore companies in WA".
It will also add to the considerable uncertainty that is being created by the proposed mining tax and price on carbon emissions," he said.
This lack of consultation and uncertainty will undoubtedly undermine investor confidence, particularly for those companies that are currently attempting to raise equity and debt finance in the domestic and overseas market place."