The Territory Labor Government wants the best deal for Territorians when it comes to the economic gains generated through mining.
As such, a change to the way mineral royalties are calculated in the Territory, has been passed in the Northern Territory Legislative Assembly today.
The Mineral Royalties Bill 2024 introduces a new ad valorem royalty scheme from 1 July 2024 for the calculation, payment and administration of mineral royalties for new mines that commence from 2024. The current profit-based mineral royalties scheme contained in the Mineral Royalty Act 1982 will be grandfathered for all existing mines that were in production in the 2023 calendar year.
The Lawler Government established the Mineral Development Taskforce (MDT) in 2021 to identify and investigate opportunities to accelerate investment in new mining projects.
In April 2023 MDT released its final report, and a key recommendation was to replace the Territory’s current royalty scheme with an ad valorem (according to value) scheme that is simple, competitive, and modern. Community consultation also occurred.
The Territory’s current mineral royalty scheme was developed in the 1980s and over time has been subject to numerous amendments, adding to the complexity of the scheme both for producers and administrators. The industry has undergone substantial technological and operational transformation over the past 40 years with the demand for minerals, and more recently critical minerals, making the Territory uniquely positioned to supply this growing demand.
The new mineral royalty framework is an ad valorem based scheme. Ad valorem royalty models are preferred and understood by industry and are based on the principle that royalty is applied to only the value of the mineral resource extracted.
The scheme incorporates four mineral treatment categories, applying four royalty rates that balance competitiveness with other jurisdictions while also ensuring that the Territory receives a fair return for its natural resources.
The four royalty rates that will apply are 7.5% for the least refined minerals, 5% for concentrates, 3.5% for chemically refined minerals and 2.5% for final or highly processed minerals.
Quotes attributable to Chief Minister and Treasurer, Eva Lawler:
“Growing the Territory’s economy and getting the best value for our natural resources is a key focus of the Territory Labor Government.
“Mining is a key driver of the Territory economy. An ad valorem scheme is simple, competitive, and delivers investment certainty, allowing new mines to commence operations in the Territory, creating significant economic benefit, higher employment and more royalties for Territorians.
“Lower royalty rates will apply to projects that have committed greater investment and created more employment in the Territory by mining minerals that will be processed right here, creating supply chains and boosting local jobs.
“Royalties are the largest form of own source revenue collected by the Northern Territory, and we want the best deal not only on the amount of royalties but also the economic benefits mining generates throughout the Territory, especially in our regional and remote areas.
“The Territory has abundant natural resources, including the critical minerals the world needs to tackle climate change, and transition to renewables.
“Right now, we are in a position to set our course for a mining industry that is not only profitable to the Northern Territory economy, but also supports the energy transition to renewables.”
Northern Territory Government
