PERTH (miningweekly.com) – Company tax and royalty payments from the Australian resources sectors reached a record A$43.2-billion in the 2020/21 financial year, up 16% on the previous financial year.
A report released by advisory firm Ernst & Young, commissioned by the Minerals Council of Australia, revealed that company taxes paid reached a new record high of A$26.5-billion and royalties also reached a high of A$16.7-billion in 2020/21 contributing significantly to federal, state and territory governments at a time when they needed it most during the Covid-19 pandemic.
The report also shows that in the last decade, between 2011/12 and 2020/21, the mining industry contributed A$254-billion in company taxes and royalties, at A$142-billion and A$112-billion respectively.
Company tax and royalties payments are expected to continue increasing in 2021/22 in line with increases in export earnings. This is driven by a positive outlook in the price and quantity produced of metallurgical and thermal coal coupled with a robust year for iron-ore, gold and base metals.
The report noted that Western Australia’s share of royalty payments increased significantly from 2018/19 to 2020/21, rising from 56% in 2019/20 to 73% in 2020/21, topping the six-year high established in 2019/20.
The report found that one of the main drivers behind Western Australia’s increase in share of royalty payments is the rise in Australian iron-ore exports. Western Australia accounts for 99% of Australia’s iron-ore production, with the remaining 1% being produced by South Australia and Tasmania, with increased royalty payments from mining companies in the state.
Also, the growing iron-ore demand in China and the disruptions to iron-ore production in Brazil have resulted in higher prices, further benefiting iron-ore producers in Australia. The value of Australian iron-ore exports thus rose from A$103-billion in 2019/20 to A$153-billion in 2020/21, with export volumes increasing during the year and prices also peaking at a decade high at the end of 2020/21.
In contrast, metallurgical coal export values fell from A$34-billion to A$23-billion and thermal coal dropped from A$20-billion to A$16-billion between 2019/20 and 2020/21. This was driven by the disruptions caused by Covid-19 and the redirection of exports to other Asian markets after the informal import restrictions imposed by China.
The MCA said this week that the resources industry in Australia continued to pay the highest average wages, the most company taxes, delivered the most export revenue and was critical to supporting regions and communities, supporting 1.1-million jobs in the mining industry and its supply chains.
“The Australian mining industry always pays its fair share of tax while providing royalties to state governments to pay for improved roads, hospitals and other infrastructure and services,” said MCA CEO Tania Constable.
“Mining companies also support thousands of regional businesses around Australia and their workers who provide essential services that keep the industry operating.
“In addition to new jobs across the nation and paying its fair share of taxes and royalties, the mining industry has been supporting local communities through the Covid-19 pandemic, providing substantial donations to hospitals, charities, child care centres and schools.”