The Victorian Government has continued with plans to apply a 2.75 per cent gold royalty from 2020, claiming paying mines are expected to remain profitable.
Gold was the only mineral exempt from royalties, and benefits from gold production have not been shared fairly among all Victorians, according to the state government.
The government noted the all-time high Australian gold price, with advances in mining technology and more ground being released in the state for minerals exploration as other reasons that supported its decision.
The royalty will not, however, apply to the first 2500 ounces of gold produced by smaller producers each year, the state government added.
Victoria’s government has opened its draft regulations for public consultation until October 21.
Minerals Council of Australia Victoria executive director James Sorahan believes it is a “reckless decision” to push ahead with the “poorly-considered gold royalty.”
This will hurt regional communities and threaten jobs in a growing industry, he said.
“There is a serious risk that mines will close early and regional development will be handicapped through less investment,” Sorahan said in a media statement.
“The projected $16 million in revenue per annum from the gold royalty compares to over $300 million spent in Victoria by gold miners in 2018 on wages, goods and services, taxes and community grants. The closure of just one mine would wipe out the entire benefit of the royalty revenue.”
The Victorian minerals industry has proposed to remove these unintended impacts by introducing an exploration offset to encourage exploration to create profitable royalty-paying mines.
It has also recommended a progressive royalty rate structure with a gold price floor to account for inevitable lean years of low or no profitability, as well as staged implementation to reduce retrospectivity.
If these changes are not implemented, royalty receipts will come at a cost to investment in exploration, according to Sorahan.
“Victoria’s gold industry has unique characteristics which require a more considered approach to the implementation of a gold royalty,” Sorahan said.
“The government needs to start again by listening to industry on the gold royalty to create incentives to encourage exploration and maximise mine life.”