Authors: Jay Leary and Jerry Ventouras
For the first time since January 2009, the New South Wales Government has announced changes to the coal royalty scheme. This follows a short consultation process with industry.
The current regime
The Mining Act 1992 (NSW) requires the holder of a mining lease to pay a royalty to the crown on minerals which are both privately and publicly owned. As prescribed by the Act, regulation 74 of the Mining Regulations 2016 contains the relevant rates payable. New South Wales utilises a three-tiered royalty framework, in which the appropriate rate payable is dependent on the method of extraction. These methods include open cut, underground and deep underground mining.
The new regime
The new royalty scheme will see coal royalties increase by 2.6 percentage points from 1 July 2024 as follows:
Type of mining
Current coal royalty rate
Coal royalty rate from 1 July 2024
Open cut
8.2%
10.8%
Underground
7.2%
9.8%
Deep underground
6.2%
8.8%
Industry opinion
While any increase in royalties will have an adverse impact on industry, it is noteworthy that the New South Wales Government actively engaged in a constructive manner ahead of announcing the increase. In addition, the royalty rate increase takes effect from the next financial year. This is to be contrasted with the approach of the Queensland Government, who acted without prior consultation and imposed changes immediately.
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