Coal industry slams NSW government’s royalty hike
The New South Wales government’s decision to hike up coal royalties has drawn the ire of miners who say it comes at a time when the industry is already challenged due to lower coal prices and increased operating costs.
NSW Minerals Council chief executive officer, Stephen Galilee, says coal producers in the state will pay 30% or more in royalties than under the existing royalty arrangements.
In consultation with the government in the lead-up to the announcement of the increase, the Minerals Council and coal producers had called on the NSW government to retain the current royalty structure and rates.
Significant additional impost
“The increase in coal royalty rates announced today by the NSW Government will impose a significant additional impost on coal producers,” Mr Galilee said.
“This would be a significant additional cost for any business or industry to manage and will present challenges for NSW coal producers facing higher operating costs, including from the introduction of the Commonwealth Government’s Safeguard Mechanism.”
The coal industry directly employs nearly 30,000 people in NSW and supports 180,000 indirect jobs.
Nearly 7,000 NSW businesses are part of the mining supply chain.
“Coal remains NSW’s most valuable export commodity by far and continues to deliver over 70% of electricity used in homes and businesses across NSW,” Mr Galilee said.
Coal cap ends
On a more positive note, industry has welcomed news that the state’s coal cap and related reservation measures will end as legislated.
“The coal cap is poor public policy that has done nothing to reduce power prices, which have continued to increase, despite a significant fall in global coal prices since the cap was introduced. The associated reservation measures were also unnecessary,” Mr Galilee said.
In releasing the news, NSW treasurer Daniel Mookhey said the government had hiked the coal royalty rates to ensure that the state earns a fair return for its resources under modern market conditions.
Additional $2.7 billion to NSW coffers
The new scheme will see coal royalties increase by 2.6 percentage points from 1 July 2024 and is estimated to add more than $2.7 billion to the NSW budget over the four years from 2024 to 2028.
The treasurer confirmed that existing discounts for underground and deep underground mining (deeper than 400m) will continue.
“The government will use the funds raised rebuilding the state’s essential services, as well as providing families with cost-of-living relief,” the treasurer said.
“The announcement is a key element in the government’s long-term plan to balance the need for budget repair, rebuild the state’s essential services and take pressure off NSW families and businesses.”