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Western Australia is set to impose a 2.5 per cent royalty on rare earths production as part of an amendment to its mining regulations.
According to The Australian Financial Review the change was announced late last week and rare earths miner Lynas Corporation may be liable for around $17 million a year in royalties.
According to The Australian WA collected $3.9 billion in royalties last year primarily from the iron ore, gold, nickel, and alumina sectors.
Petroleum royalties collected by WA came close to $5 billion.
The royalty hike follows a recommendation by the Commonwealth Grants Commission to slash WA’s share of GST grants by a record $598 million.
The Commission said the state’s growing royalties and payroll taxes, collected from the high wages of mining workers, justified the cut.
The decision sparked an angry response from the WA Government, but the protests were quickly dismissed by prominent economist Saul Eslake.
Eslake said there had never been a part of Australia that has been "so much richer" than the rest of the country.
He said the WA Government "shouldn’t expect too much sympathy from the rest of the country" in regards to its GST share.