Photo by: Bloomberg
PERTH (miningweekly.com) – The Australian Securities Exchange (ASX) has warned that it could temporarily suspend the share trading of Western Australian gold producers if the state government’s plans to increase gold royalties were passed through Parliament.
The Australian on Tuesday reported that the ASX would repeat the steps it took earlier this year when more than a dozen resource company stocks were suspended after the Tanzanian government introduced an overhaul of its royalty and tax regime, allowing the affected miners to update the market on the impact of the royalty changes to their operations.
The Western Australian government flagged the 50% increased royalty charges in its stage Budget earlier this year. The current 2.5% rate will apply for each month when the gold spot price is A$1 200/oz or less, and an increased rate of 3.75% will apply when the gold spot price is above A$1 200/oz.
Based on the current gold price, the increased rate equates to an additional royalty of about A$20/oz.
“For decades, Western Australia has been an attractive and stable destination for mining investment, but today we find ourselves likened to Tanzania,” said gold producer AngloGold Ashanti’s regional head Mike Erickson.
“The threat of such a dramatic increase in royalty payments substantially increases the sovereign risk for investors and undermines confidence in the sector.
“As a global company competing for capital with projects across the globe, decisions like this will make it very difficult for future Western Australian projects to get off the ground.”
The Chamber of Minerals and Energy (CME) has again warned that the decision to increase the royalty rate would cost jobs and result in mine closures.
“The state government needs to understand this decision will have real impacts on working men and women. It will result in some mines closing and workers losing their jobs,” CME CEO Reg Howard-Smith said.