Hunter coal mines will soon be paying more royalties, under a new scheme announced by the NSW Government.
Royalties will increase by 2.6 per cent from July 1 next year meaning open cut mines will be forced to pay 10.8 per cent, while underground will pay 9.8 and deep underground 8.8 per cent.
The cap of $125 per tonne was introduced last year in a bid to ease energy bill pressures.
NSW treasurer Daniel Mookey said with the State Budget being handed down later this month, the move will improve the bottom line by more than $2.7 billion over four years.
“This is a fair outcome for the people of NSW. The old system is out of date. The market has moved on. That’s why we are modernising the state’s coal royalties.
“The new scheme will make sure the people of NSW share in the wealth their resources create.”
Minister for Finance and Minister for Natural Resources Courtney Houssos said they believe they’ve struck the right balance.
“Having embarked on extensive consultations with mining companies, industry groups and our trading partners, we have struck the right balance.
“These changes will take effect on 1 July 2024 giving the industry time to adjust and upholding the Minns Labor Government’s commitment not to consider royalties changes while emergency measures were in place.”
The coal industry isn’t as happy with the update though.
NSW Minerals Council CEO Stephen Galilee said they acknowledge the coal sector has an important role to play and they do take their obligation seriously but this hike seems extreme.
“The rate increases announced today, will mean NSW coal producers will pay at least 30 percent or more in royalties than under the existing royalty arrangements, continuously throughout the commodity price cycle, including when coal prices are low.
“This would be a significant additional cost for any business or industry to manage and will present challenges for NSW coal producers facing higher operating costs, including from the introduction of the Commonwealth Government’s Safeguard Mechanism.”
One of the Hunter’s biggest mining companies, Glencore, said they were extremely disappointed with the decision.
“We strongly believe that the State is already earning a fair return for its resources and that the coal industry’s contribution to NSW economy goes way beyond royalties.
“It is very important that the NSW Government is not dismissive of the contribution of the coal sector to the State economy or the role our companies play in providing jobs, supporting communities and local businesses.
“Last year Glencore’s coal business alone contributed $8.1 billion to NSW economy and work for 6,320 employees and contractors.
“While Glencore is against the increase in coal royalties, we do acknowledge the consultative approach adopted by the Minns Government with the coal industry to arrive at an outcome.
“We support the NSW Government’s decision not to extend the coal price cap and coal reservation measures in NSW; this was bad public policy from start to finish which did not achieve its stated objective of reducing power prices.”