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Terms of reference set for royalty rate review

Posted On August 19, 2013

Hon Colin Barnett MEc MLA

Hon Bill Marmion BE MBA MLA

  • Government opens consultation period on review of State’s mineral royalty system
  • Submissions period open until October 31, 2013

The Western Australian Government has begun formal public consultation on the State’s mineral royalty rates.

Premier and State Development Minister Colin Barnett and Mines and Petroleum Minister Bill Marmion today released the terms of reference and a stakeholder consultation paper for the Mineral Royalty Rate Analysis.

Industry representatives and other interested parties will have until October 31, 2013 to consider the paper and make submissions.

Mr Barnett said the aim of the review was to ensure the State’s minerals royalties operated fairly and efficiently, both for the mining industry and the resource owners, West Australians.

“Royalties are vital to the State’s ability to provide the services and infrastructure West Australians expect,” he said.

“It is important that royalty rates deliver a reasonable return to the community without discouraging production or acting as a disincentive to new investment.”

The State collected $5.1billion in mineral and petroleum royalties in 2012.

Mr Marmion said mineral royalty rates were designed to deliver a return to the State equivalent to about 10 per cent of the mine-head value of a resource.

“For most producers, mineral royalty rates operate on a three-tier system reflecting the degree of processing involved in production,” Mr Marmion said.

However, he said, the current system also took into account historical considerations such as rates negotiated as part of major project agreements.  For coal, salt and basic materials, a rate per tonne is applied.

Petroleum royalties, which are returning 10 per cent of value at the well-head, do not form part of the review.

The Premier said the Mineral Royalty Rate Analysis would:

  • focus on identified anomalies in the current structure, rather than consider major changes to royalty arrangements
  • examine the efficacy and appropriateness of existing policy
  • consider the equity and efficiency implications of any proposed changes to the royalty rates.

Fact File

  • WA Government announced review of mineral royalty rates in WA in May 2012
  • The last public review of the State’s royalty system was Bradley Mineral Revenues Inquiry 1984-86
  • The value of WA mineral and petroleum production in 2012 was $96.9billion (including projects in the Commonwealth offshore area)
  • Following consideration of submissions, the Department of State Development and the Department of Mines and Petroleum will prepare an issues paper and conduct detailed consultation
  • Copies of the terms of reference and the stakeholder consultation paper are available from the Department of State Development and the Department of Mines and Petroleum, including regional offices, or at http://www.dsd.wa.gov.au/royaltyrates 

Source: ProjectLink.com.au

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