The decision of the Northern Territory Treasurer Nicole Manison to increase royalties on the mining industry in the coming budget has dismayed many within the mining industry.
Chief executive of the Association of Mining and Exploration Companies (AMEC) Warren Pearce has called the change “an absolute disaster for the Northern Territory economy”.
According to the Minerals Council of Australia, the new royalty system is “a planned hybrid of both ad valorem and profits-based elements” which could make the NT one of the world’s most expensive locations for mining development.
“There is still time for government to reverse this disastrous decision and industry have offered to engage with government to develop a modified proposal,” Mr Pearce said.
The new proposals, which are set to start from July 2019, will require mining companies to pay whichever is the greatest amount out of 1% of a mine’s first mineral royalty year, 2% in its second royalty year, and 2.5% in the third and following royalty years.
According to AMEC, these rules threaten A$6 billion in new mining investment, A$70 million per annum in royalties and over 4,000 new construction and operation jobs.
Speaking about the state budget plan as a whole, Ms Manison explained that “the massive reduction in GST means the Territory has lost more than A$800 million per year in critical funding.”
“It is simply not possible to match these cuts with savings or revenue measures — to do so would mean shutting down every school or hospital in the Territory or unfairly taxing Territorians. This government will not do that,” she added.
The proposal comes a week after the Northern Territory lifted its ban on the controversial hydraulic fracturing process when exploring for oil and gas.