Statement from NSW Minerals Council CEO Stephen Galilee
The increase in coal royalty rates announced today by the NSW Government will impose a significant additional impost on coal producers at a challenging time of lower coal prices and increased operating costs.
The coal industry directly employs nearly 30,000 people in NSW and supports 180,000 indirect jobs. Nearly 7,000 NSW businesses are part of the mining supply chain. Coal remains NSW’s most valuable export commodity by far and continues to deliver over 70 percent of electricity used in homes and businesses across NSW.
While realistic about the likelihood of an increase in royalty rates, the NSW Minerals Council and coal producers maintained throughout the NSW Government’ consultation process that the current royalty structure and rates were appropriate for NSW, and should be retained.
It is acknowledged that the coal sector has an important role to play in relation to royalties, particularly in relation to repair of the NSW Budget, and the industry takes its royalty and taxation obligations seriously.
However, 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.
Confirmation that the coal cap and related reservation measures will end as legislated is welcome. The coal cap is poor public policy that has done nothing to reduce power prices, which have continued to increase, despite a significant fall in global coal prices since the cap was introduced. The associated reservation measures were also unnecessary.
The industry appreciates the opportunity to engage constructively with the NSW Government during the consultation process, and will continue to do so.