The Chamber of Minerals and Energy of Western Australia (CME) has warned that the proposed increase in royalty on gold will result in around 3,000 job losses.
Last month, the Western Australian Government announced in its state budget that miners will be required to pay an additional A$20 ($16) per ounce from next year.
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Based on economic modelling, CME has indicated that the planned royalty hike will cause job losses impacting more than 10% of the 25,000 employees in the gold sector.
The modelling focused on the operations of 12 companies, covering 27 individual mines. It noted that at current prices, five mines are operating on a margin of less than 10%.
Chamber of Minerals and Energy CEO Reg Howard-Smith said: “No industry can cope with an unexpected 50% increase in a major cost.
“The analysis demonstrates, not only are jobs at risk, but so too is government revenue. The five mines at risk at the current gold price currently pay A$46.5m ($36.3m) of royalties. If they are forced to close by the government’s budget action, the government will lose this revenue.”
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By GlobalDataAt a price of A$1,400 per ounce, an additional five mines are said to be at risk, with each operating on a margin of less than 10%.
CME further stated that the royalty hike will absorb around $125m of industry cash-flow per annum.
Under the planned tax rise, miners will be required to pay the new royalty rate of 3.75% if the gold spot price breaches the A$1,200 per ounce mark.
