The NSW government will update royalty rates from next year to increase its revenue from coal resources
The NSW government has announced that it will be increasing coal royalties paid by coal mining companies in the state by 2.6 per cent from July 1, 2024. It will replace the emergency domestic coal cap and reservation measures the previous government introduced in December 2022.
“The old system is out of date and this is a fair outcome for the people of NSW,” NSW treasurer Daniel Mookhey says.
“The market has moved on – that’s why we are modernising the state’s coal royalties.
“The new scheme will make sure the people of NSW share in the wealth their resources create.”
The changes are stated to improve the state’s budget position by more than $2.7 billion over the four years from 2024 to 2028.
Coal royalties have not increased since January 2009 and, since then, international prices have surged, peaking well above $500 per tonne in late 2022 due to Russia’s invasion of Ukraine.
International prices have since remained above average, trading consistently above $200 per tonne, while existing discounts for underground and deep underground mining (deeper than 400m) will continue.
The decision also mitigates a $1.3 billion write-down in royalties’ revenue in the forthcoming budget.
The NSW government says its plans to use the funds to rebuild the state’s essential services, as well as providing families with cost-of-living relief.
“Coal is an important part of the state’s energy mix and a key contributor to our economy,” minister for finance and natural resources Courtney Houssos says.
“Having embarked on extensive consultations with mining companies, industry groups and our trading partners, we have struck the right balance.
“These changes will take effect on July 1, 2024, giving the industry time to adjust and upholding the government’s commitment not to consider royalties changes while emergency measures were in place.”
Under the new system the rates for open cut, underground and deep underground mining will be: 10.8 per cent for open cut mines (up from 8.2 per cent); 9.8 per cent for underground mines (up from 7.2 per cent and 8.8 per cent for deep underground mines (up from 6.2 per cent).