CME seeking royalty guarantee

THE Chamber of Minerals and Energy of Western Australia (CME) has called on the WA government to keep royalties and related charges at current levels.
CME seeking royalty guarantee CME seeking royalty guarantee CME seeking royalty guarantee CME seeking royalty guarantee CME seeking royalty guarantee

CME CEO Paul Everingham

Staff reporter

The call comes ahead of the WA budget, which is due to be handed down next Thursday.

CME's pre-budget submission highlighted the strong collaboration between the resources sector and the government during the COVID-19 pandemic.

"What we are seeking from the WA government is a commitment to not increase or introduce new royalties, taxes, levies and other charges for the sector," CME CEO Paul Everingham said.

"Throughout COVID-19, our sector has managed to maintain strong production volumes, and while we are optimistic this can continue, there are no guarantees when it comes to market conditions such as commodity prices in the face of global economic uncertainty.

"Every additional tonne produced in WA means more royalties for WA. Royalty revenue generated by the WA resources sector in the 2019-20 financial year totalled A$9.29 billion, which goes a long way to funding schools, hospitals and essential services across the state."

Everingham said WA was an attractive investment destination due to the stability and long-term certainty of current fiscal settings.

"WA has proved to be an attractive investment destination, in part because of the stability and long-term certainty of current fiscal settings," he said.

"To increase costs now would be to risk the global competitiveness of a sector that is the lifeblood of WA's economy."

More than 130,000 people are employed in WA's resources sector. 

CME is also requesting the WA government consider fiscal and policy settings to stimulate investment in resources projects which will diversify the economy and add value through downstream processing.

Everingham said CME supported the long-standing ad valorem royalty system in WA, but noted the specific royalty tiers applied to certain processed commodities might not be the best fit for modern, high value-add commodities that carry higher risk.

Examples include critical minerals like lithium, heavy rare earths, and magnetite concentrates and pellets.

"This is about having effective and competitive royalty settings to incentivise downstream investment in value-adding mineral concentrates, chemicals and other products," Everingham said.

"These commodities typically involve higher levels of capital investment, processing intensity and complexity to achieve grades suitable for downstream production and as manufacturing inputs.

"Many are also highly technical and labour-intensive. For instance, lithium sales make up only 1% of the sector's total exports but operators employ 4% of the workforce.

"It's well-documented how important minerals associated with the battery supply chain, including lithium and rare earths, could be for WA's long-term economic prosperity. But to ensure that happens, we need to be encouraging investment now."

CME also called for the streamlining of regulatory reforms, including environmental approvals processes.

"The WA government has stated on numerous occasions that it wants to reduce unnecessary red tape to drive better decision-making and help stimulate the economy, and the mining and resources sector is welcoming of that approach," Everingham said.

"We would ask that the Streamline WA initiative is appropriately funded and resourced to continue delivering on its whole-of-government mission in an effective, timely manner.

"There are immediate, low-risk gains that can be made through measures like omnibus bills, while a more effective lead agency or case management framework can also be used to accelerate end-to-end project approvals."