The West Australian Government has announced a set royalty rate of 5% for magnetite concentrates.
Mines minister Norman Moore said this rate is consistent with the royalty rate that was already within the Mining Regulations 1981 for beneficiated iron ore.
Because magnetite is iron ore, there is no need for a new magnetite category under Regulation 86 and it is intended that the beneficiated iron ore royalty rate of five per cent will apply to magnetite concentrate,” Moore said.
“Some of the State’s proposed magnetite deposits include a significant vanadium resource, in such cases, if the project does not have a vanadium separation circuit installed, a royalty rate of five per cent of the vanadium pentoxide price will apply to the contained vanadium in the magnetite concentrate.”
The move is expected to garner around $60 million in 2011-12 from magnetite royalties, with an increase to more than $160 million annually by 2014-15.
CITIC Pacific’s Sino Iron project, which will commence production next year, will be the state’s first magnetite producer.
While some miners had called for initial relief or a relaxation to the rates, Moore said a set rate contained in legislation was the best approach.
The Association of Mining and Exploration Companies (AMEC) labelled the announcement ‘disappointing’.
"AMEC has been consulting with the government on various options for the future treatment of royalty rates as it relates in particular to the magnetite sector," AMEC CEO Simon Bennison said.
"In spite of this announcement we propose to continue discussions with the government on the future application of royalties in this emerging industry with a view to assisting it come on stream in the most effective way possible," he said.
The 5% rate will also apply to uranium oxide concentrates.
“Uranium mining presents a significant opportunity to further diversify WA’s resources sector and also make a significant future contribution to the State’s economy,” he said.
“As this industry grows, so too will the economic benefits for WA.”
Western Australia has taken a significant step forward as Toro Energy’s Wiluna uranium project moves into the public exhibition phase of its assessment.
It is the first uranium miner in the state to reach this point.