The New South Wales Government has announced a 2.6 percentage point increase in coal royalties effective from July 1, 2024.
This decision comes in the wake of stagnant royalty rates since 2009 and recent surges in international coal prices, influenced in part by Russia's invasion of Ukraine in 2022.
NSW Treasurer Daniel Mookhey stated the increase aimed to offer "a fair return" for the state’s resources and improve its fiscal position by more than A$2.7 billion over four years from 2024-25.
"This is a modernisation of the state's coal royalties to ensure that the people of New South Wales share in the wealth their resources generate," Mookhey said.
Consultations involved two roundtables with 13 mining companies and individual meetings with seven major mine operators. The treasurer also engaged the Consul Generals of Japan and Korea, significant importers of NSW coal.
“We’ve also received 20 written submissions from representatives of the mining industry. We’ve also managed to have detailed consultation with affected companies on price forecasts, currency assumptions, volume growth and cost curves,” he said.
Royalty increases
The adjusted royalty rates for different mining techniques are:
- open-cut mining at 10.8%
- underground mining at 9.8%
- deep underground mining at 8.8%.
Existing discounts for specific mining categories will remain intact.
Mookhey acknowledged that the change might not be welcomed universally but emphasised that it's a significant step towards budget repair.
“The existing coal royalty system is out of date. That’s why we are modernising these rates to ensure that the people of New South Wales do indeed share in the wealth that their resources create.
“We think we’ve got the balance right. This policy today is a clear signal about how this government intends to carefully calibrate our policy settings so we are repairing the budget so we can fix the state’s essential services.”
The revenue generated is slated for restoring essential services including healthcare, housing supply and education.
"Every dollar raised will be invested back into essential services and providing cost-of-living relief," he confirmed.
Natural Resources Minister Courtney Houssos backed the decision, stating it struck "the right balance" and demonstrated the Minns Government’s commitment to both the mining sector's stability and essential services for NSW residents.