PERTH (miningweekly.com) – The Victorian government has come under fire for plans to introduce a 2.75% royalty on gold miners, with the resources sector saying it would threaten hundreds of jobs in regional communities.
A similar royalty already applies on all other minerals mined in Victoria, apart from lignite.
The Minerals Council of Australia (MCA) on Monday said that the state government had not consulted, or listened to, regional communities that rely on highly paid, high skilled jobs that mining delivers in Victoria.
“Despite its own resources strategy stating that ‘Mining operations are the backbone of many regional towns, providing employment, opportunity and a sense of community’, the government has not consulted industry or local communities before announcing this new tax on regional jobs,” said MCA CEO Tania Constable.
She pointed out that Victoria was already behind every other Australian state, apart from Tasmania, on mining competitiveness, with the Fraser Institute’s Annual Survey of Mining Companies ranking Victoria forty-third out of 83 jurisdictions globally in its index rating investment attractiveness.
“A new 2.75% gold tax will add to uncertain project approval and regulatory regimes and regulatory duplication and inconsistencies. It will also drive away investment at the very time when Victoria needs the ongoing long-term prosperity created by mining in gold operations in Fosterville, Ballarat and Stawell.”
Constable said that the claim that Victoria should impose a gold royalty because other states did, ignored the unique characteristics of gold mining in Victoria.
“Royalty regimes are designed differently in each state to encourage development of a state’s mineral resource for the benefit of the community, including different royalty rates, depreciation arrangements, exemptions and other features.
“If the Victorian government does not immediately abandon this tax cash grab, its claimed commitment to regional development and communities will be a hollow boast. Victoria’s minerals industry will join regional communities and others in fighting for regional jobs and long-term investment and oppose this new gold tax.”
The Association of Mining and Exploration Companies (Amec) has also warned that the new gold tax would be “disastrous” for the state’s recovering gold industry.
“This is giant step backward for the gold sector that is only just starting to recover after years of minimal activity and may snuff out fledgling gold exploration projects,” said Amec CEO Warren Pearce.
“This royalty grab has been made with zero consultation with industry, and must not be implemented.
“Amec is calling on the Victorian government to immediately abandon this proposal and consult with industry to understand the impacts on gold miners, explorers, drilling companies, services providers, and investment in Victoria.”
Pearce said that the state government had significantly overestimated the strength of the gold sector, putting existing projects and jobs at risk, as well as “massively” diminishing the prospects of new projects being developed.
“These projects are finely balanced with low margins, meaning that cost saving, and efficiency measures are routinely required in order to keep their operations viable.”
“Victorian gold reserves are at a far greater depth than in other jurisdictions, making exploration and operation significantly more expensive to conduct, and making many of these mining projects extremely marginal.”
Mining employs nearly 12 000 Victorians and supports 88 000 more jobs through a supply chain of small and medium-sized businesses in the mining equipment, technology and services (METS) sector.
Despite mining licences only covering some 0.2% of land in Victoria, the minerals and METS sectors support about 4% of the state’s gross state product, with a combined economic contribution to the Victorian economy of at least A$13.6-billion.