The heads of some of the world’s largest gold miners have urged the WA government to meet with them and reconsider a 50 per cent hike in royalties that they warn will leave the state’s economy worse off.
The executives, speaking at a joint press conference in Perth on Wednesday, warned any gains from the royalty hike would be overwhelmed by massive job losses due to marginally profitable mines either being shut or not developed and built at all.
Treasurer Ben Wyatt announced the royalty increase from 2.5 per cent to 3.75 per cent in last month’s budget, estimating it would raise $400 million over four years and cost miners an extra $20 per ounce of production.
Both he and Premier Mark McGowan have rejected economic modelling released by lobby group the Chamber of Minerals and Industry this week that indicated the increased royalties would lead to 3000 job losses.
However, executives from eight gold mining or mining services companies all said on Wednesday there was no doubt they would have to cut jobs.
Australia’s largest gold miner Newcrest Mining’s chief executive Sandeep Biswas called the hike an “ill-considered grab for cash” that threatened the viability of it’s Telfer mine, the third-largest in WA.
The royalty increase would be a “net negative” for the WA economy, he said, urging the government to meet again with the industry to understand its dynamic challenges, including high costs, gold prices and exchange rates.
“This royalty increase would would have made Telfer’s profit last year zero,” he said.
“Yes, your purported intake goes up on the day of the royalty increase.
“But then you get decisions made like exploration not being done. Telfer’s expansion may not be done, which means the open pit instead of lasting six years lasts two years. What do you think that will do to the royalty take-in?
“If you lose 3000 jobs as an industry, where’s that in terms of payroll tax and income tax? The whole reverberations as a result of jobs losses … just aren’t well understood.”
However, both Mr McGowan and Mr Wyatt again rejected the industry’s complaints, although the premier said he would “look at measures to ensure that if the price of gold goes down the royalty increase kicks out”.
CME chief executive Reg Howard-Smith said he was urging the Liberal Party to block Labor’s plans in parliament, with some cross-bench MPs already indicating they would oppose the royalty increase.