Ground Breakers: Miners lament Victorian tax hikes, because of course they do
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Miners love a whinge, and the latest comes after a Victorian budget which will see the Andrews Labor leadership hit major businesses and property investors with a set of levies designed to help pay back its Covid-19 debt.
In the short term another $3.9b will come from businesses with payrolls above $10 million and $4.7b from property investors. The former will ensnare the small number of miners with real or corporate operations in the state.
Last among Aussie mining jurisdictions under the Fraser Institute’s latest survey (sans teeny tiny Tasmania), the latest budget had a couple of small resources initiatives that received the approval of the Minerals Council of Australia.
“The establishment of an Earth Resources Approvals Coordinator will provide strategic project facilitation to help complex mining projects navigate through the array of Acts, regulators and tiers of government and deliver much needed investments in regional Victoria,” the MCA’s Victorian mouthpiece James Sorahan said.
“MCA Victoria had called for this project facilitation role and welcomes the Government’s commitment to facilitate the pipeline of new critical minerals and important existing mines through complex approvals processes.
“Funding in the Budget for amendments to the Mineral Resources (Sustainable Development) Act 1990 is timely as the state seeks to modernise its mining legislation to focus on outcomes and risk-based regulation.
“Taken together, the $23.2 million in resources initiatives are a positive example of government working with industry to get critical minerals projects underway.”
All that is buttressed by complaints about, of course, the taxes.
“However, the additional payroll tax is a tax increase on Victorian mines comes at a bad time for increasing confidence for new investment in Australian mining. This tax increase will be an additional burden on the very businesses that kept the Australian economy from a prolonged recession as the nation battled COVID,” Sorahan said.
“The most recent Fraser Institute report ranked Victoria very poorly on approval timeframes. More work needs to be done to deliver timely permitting approvals and to support industry investment.
“Clearer and more certain project approval timeframes, and reform to Victoria’s flawed gold royalty is required if Victoria is to attract mining investment.
“Victorian mining is estimated to pay $140 million in royalties in 2022-23. This is in addition to various fees and charges imposed by mining.”
How flawed that gold royalty actually is is a matter for debate.
$140m, a large slab of it coming from Canadian owned Agnico-Eagle’s Fosterville gold mine, is tiny in the context of other mining states.
The idea of imposing a gold royalty — at a rate of just 0.25% above the 2.5% royalty paid in WA and well below the 4% rate in NSW — is hardly novel.
In one instance, the company which owned the Ballarat gold mine went into administration in March, but the management of that operation clearly left a lot to be desired.
At the same time, Victorian gold exploration spurred by discoveries like Fosterville’s Swan Zone and Stavely Minerals’ (ASX:SVY) Cayley Lode copper disovery, has surged to new highs.
Since the royalty was announced in 2019 and brought into force in 2020, Victorian explorers have spent $153m, $218.5m and $201.3m in 2020, 2021 and 2022, the three highest spending years on record.
Gold made up well in excess of 50% of that. The MCA has previously said the royalty should have had a staged introduction and exploration offset baked in.
But explorers are hardly terrified of investing.
The other area where Victoria is showing some edge is in mineral sands and rare earths, with developers like VHM (ASX:VHM) emerging to turn the state into a super power in the rare earths and magnet metals space.
“Victoria is emerging as a major supplier of mineral sands and rare earths with a number of advanced projects in the pipeline which could double the number of mines in the state. Developing Victoria’s mineral sands and rare earth element deposits will embed Victoria into renewable energy supply chains,” Sorahan said.
“Importantly, developing Victoria’s projects in mineral sands, copper and zinc, as well as exploration projects in gold, base metals, REE and lithium, will help reduce inequality in regional areas and provide a much need boost to regional Victoria.”
AMEC, which lobbies for companies at the smaller end of town, called on the Vics to finish the work they promised to start a year ago on a $7.4m critical minerals prospectus and grant program.
“Industry needs clear government support to continue exploration success, the identification of new mineral deposits and the ability to progress discoveries into productive operating mines that will lead to growth, jobs and investment,” AMEC CEO Warren Pearce said.
“Victoria must compete as an exploration and mining destination of choice and needs to work harder to secure the future of the industry and its important role in underpinning the Government’s key emissions objectives.”
You’ll only find it in gold and battery metals today with iron ore prices dropping below US$100/t yesterday and copper, nickel, aluminium and zinc all in struggle town.
Gold prices rebounded around 3/4 of a per cent to US$1975/oz as Congress continued to dilly-dally on negotiations to raise the US debt ceiling.
Copper fell slightly to US$8102/t as LME inventories continued to increase, lifting 80% over the past month.
As of May 19 a tick over 92,000t of copper metal sits in LME warehouses, up from 51,850t on April 19.
Nickel prices fell 1.7% to US$21,047/t while zinc dropped 2.4% to US$2372.50/t.
Allkem (ASX:AKE) and Lynas Rare Earths (ASX:LYC) were the top dogs among the large cap miners, while goldies Ramelius (ASX:RMS), Bellevue (ASX:BGL) and Regis Resources (ASX:RRL) excelled in the mid-tier.
The materials sector fell 0.85%, led by falls among the large iron ore miners.