Mineral Royalty Rate Analysis final report now available
| Date: | Wednesday, 25 March 2015 |
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Royalty review identified a high level of acceptance of WA’s royalty system.
A comprehensive review of Western Australia’s royalty system has identified that it is successfully delivering a fair return to the community while providing a stable and predictable system for industry.
The Mineral Royalty Rate Analysis (MRRA) final report, released today by Mines and Petroleum Minister Bill Marmion, identified a high level of acceptance of the State’s basic royalty structure in industry and the wider community.
The State Government noted the 18 recommendations in the report but confirmed there would be no changes to royalty rates in this year’s Budget.
Minister for Mines and Petroleum Bill Marmion said an overwhelming requirement of the royalty system was for it to be stable and predictable so that it continued to help attract investment in the sector.
The review, announced as part of the 2012-13 State Budget, focused on three main criteria:
- The ad valorem rate applied to particular minerals should be guided by the level of processing;
- The royalty system should return revenue to the community broadly in line with the benchmark of 10 per cent of the mine-head value, between commodities and over time; and,
- Royalties should be set with a view to conditions in the industry, including whether royalties are out-of-step with charges in comparable jurisdictions, where meaningful comparisons are possible.
Key findings were that the ad valorem system provides a simple, transparent and predictable framework and has delivered substantial increases in royalty revenues, and the review’s recommendations recognise and reinforce its strengths. The review also found that stable royalty arrangements have contributed to Western Australia’s reputation as a favoured destination for mining investment.
The review recommended that the benchmark be retained as a consideration when assigning a royalty tier to a new commodity, or when the overall royalty system is reviewed. The review also examined anomalies and found that, in most cases, there were good reasons for the variations.
The review team consulted widely throughout the process and the final report was also peer-reviewed by a former senior executive of Queensland’s Department of Mines and Energy, who found that the process had been genuinely consultative and not tailored to a pre-determined outcome.
An Industry Reference Group comprising the Chamber of Minerals and Energy, the Association of Mining and Exploration Companies and the two departments met regularly throughout the review process.
The Mineral Royalty Rate Analysis report can be found on the DMP website.
