PERTH (miningweekly.com) – The Queensland Resources Council (QRC) has warned that the state’s mineral exploration sector will also be put at risk with the coal royalty hike.
QRC CEO Ian Macfarlane told the Queensland Exploration Council’s (QEC's) yearly Tech Summit in Brisbane, that the exploration industry was right to be concerned about the flow-on effect of the royalty hike on its ability to compete internationally for project capital.
“Without consistent and successful exploration, and the confidence of domestic and international investors, there is no Queensland resources industry,” he said.
“It can take years, if not decades, for exploration companies to gain approvals to explore to get minerals and commodities out of the ground and transported to customers, so maintaining long-term confidence in our sector is essential for investors to make long-term decisions."
According to a QEC survey last year, explorer sentiment towards access to investment capital was the best in its 11-year history.
Macfarlane said the Queensland government's decision to dramatically increase coal royalty tax rates could not have come at a worse time for the exploration, minerals and energy sectors.
"This irresponsible move - made behind closed doors and without any consultation with industry - has damaged our reputation as a safe and reliable destination for investment,” he said.
“The resources sector is Queensland’s number one export industry, supporting the jobs of more than 422 000 people and contributing A$84.3-billion to the Queensland economy last financial year, so this is a serious misstep by the government,” he said.
“Exploration is at the heart of this activity, sustaining a pipeline of new resource developments, which in turn creates opportunity, economic activity and a royalty tax stream that helps pay for doctors, nurses, teachers and police, as well as roads and other essential public infrastructure."
Under the government's new coal royalty regime, royalty taxes paid by coal producers this financial year will rise from about A$7.3-billion under the previous regime to around A$16-billion.
Once gas and metal royalties are included in this figure, the total amount of resources royalties to be collected this financial year by the Queensland government will reach around A$18.3-billion.
QEC chairperson Kim Wainwright echoed Macfarlane’s statement, saying the minerals exploration sector will be impacted by the state government’s decision to increase royalty taxes on the industry.
“Exploration companies look to sell their projects to investors, and if investors see something happening in a region that causes concern, such as a government that has dramatically increased royalties, that presents a reason not to support that project, it’s as simple as that.
“This is at a time when the sector was already tackling a key obstacle to growth – a lack of skilled labour. We urgently need more young people choosing a career in resources and exploration.”