AMEC slams iron ore royalty rate increase

The Association of Mining and Exploration Companies (AMEC) have slammed the West Australian Government’s decision to increase mining royalty rates.

The State Government yesterday announced its new plan for royalty rates, which is predicted to generate around $4 billion per year for Western Australia.

Part of this plan is to lift the royalty rate for iron ore fines from the current 5.6% to 6.5% from July 2012, and then to 7.5% in 2013, to align it with existing rate for other forms of iron ore.

“AMEC is extremely disappointed that industry bodies and individual companies have not been consulted in respect of the WA Government’s decision to increase the royalty rate on iron ore fines,” AMEC chief executive Simon Bennison said.

“This will be yet another unexpected financial impost on iron ore companies in WA,” he added.

The decision to increase the rates adds to the existing uncertainty around the proposed Mineral Resources Rent Tax (MRRT), which has not guaranteed whether miners will receive rebates from the Federal Government for future increases of royalty rates.

However, AMEC did praise some of the WA budget’s initiatives.

These included funding for social infrastructure; the Pilbara cities project; increased skilled migration; and the appointment of a full time mining warden to deal with objections raised to mining tenement applications.

“AMEC also welcomes the government’s overall desire to drive investment in infrastructure and services in regional areas and major population hubs in front of forecast demand. Such a strategy is essential in ensuring that undue production and commodity distribution delays are not encountered by the resources sector,” Bennison added.

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