The Association of Mining and Exploration Companies (AMEC) has criticised the Australian Northern Territory Government’s announcement of major changes to the Territory’s mineral regime, which delivers a high increase in royalties for mining projects.
From 1 July 2019, the new hybrid scheme requires mining companies to pay the greater of the assessed amount under the current profits-based system, or a minimum value-based royalty on their gross mineral production revenue at a rate of:
• 1 per cent in a mine’s first mineral royalty year on or after 1 July 2019,
• 2 per cent in the second mineral royalty year, and
• 2.5 per cent in the third and following mineral royalty years.
“This massive royalty increase will be an absolute disaster for the Northern Territory economy,” said Warren Pearce, Chief Executive Officer, AMEC.
“This decision immediately threatens the viability of $6 Billion of new mining projects, that would have delivered 4,000 new jobs and hundreds of millions in new royalty revenue for the Government.
“Many of these mining projects will simply no longer go ahead.
“At a time when the Northern Territory desperately needs industry investment to stimulate the economy and create jobs the Government has effectively taken the decision to close the door on investment”, said Mr Pearce.
Mr Pearce believes that the State is already struggling to attract investment and is widely recognised as a high cost jurisdiction, which he believes to be one of the major reasons for the decline in mineral exploration and mining activity over the last decade.
“This decision will make it one of the most expensive places in the world to develop a mining project”, said Mr Pearce.
“The Territory needs to grow its economy and the best opportunity to do this is through the greater development of the resource sector.”
“There is still time for Government to reverse this disastrous decision and industry have offered to engage with government to develop a modified proposal,” said Mr Pearce.