Northern Territory Treasurer Nicole Manison has revealed state budget plans to introduce increased royalties on the mining industry, a situation the chief executive officer (CEO) of the Association of Mining and Exploration Companies (AMEC) has called “an absolute disaster for the Northern Territory economy”.
If the new royalty system — “a planned hybrid of both ad valorem and profits-based elements”, according to an announcement from the Minerals Council of Australia (MCA) —goes ahead, it will be the only mining jurisdiction in the world to use such a system and as such, may become one of the world’s most expensive locations for mining development.
“Regrettably, today’s decision may well see investors and industry turn their back on the Territory for another decade,” said Warren Pearce, CEO of AMEC.
“There is still time for government to reverse this disastrous decision and industry have offered to engage with government to develop a modified proposal.”
The new proposals, intended to start from July 2019, will require mining companies to pay whichever is the greatest amount out of 1 per cent of a mine’s first mineral royalty year; 2 per cent in its second royalty year; or 2.5 per cent in the third and following royalty years.
According to AMEC, these rules threaten $6 billion in new mining investment, $70 million per annum in royalties and over 4000 new construction and operation jobs.
Speaking about the state budget plan as a whole, Manison explained that “the massive reduction in GST means the Territory has lost more than $800 million per year in critical funding.
“It is simply not possible to match these cuts with savings or revenue measures — to do so would mean shutting down every school or hospital the Territory or unfairly taxing Territorians. This government will not do that.”