The calculation of mineral royalties is set to change in the Northern Territory, with new legislation introduced by the Northern Territory Government.
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 Northern Territory 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 has been subject to numerous amendments, adding to the complexity of the scheme both for producers and administrators.
The Northern Territory Government said that the industry has undergone a 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 the growing demand.
The Territory Government said that 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 aiming to ensure that the Territory receives a fair return for its resources.
The four royalty rates that will apply are 7.5 per cent for the least refined minerals, five per cent for concentrates, 3.5 per cent for chemically refined minerals and 2.5 per cent for final or highly processed minerals.
Northern Territory Chief Minister and Treasurer, Eva Lawler, said, “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.”
The Minerals Council of Australia’s Executive Director – MCA Northern Territory, Cathryn Tilmouth, welcomed the changes whilst also calling for more support for the sector.
“While important, this change to the royalties system to bring it in line with other jurisdictions in Australia, is only one part of the puzzle.
“With the mining sector delivering so much to the Northern Territory economy through royalties, it is more important than ever to start delivering new projects and new royalties streams as existing operations come to the end of their production life around the end of this decade.”
Image credit: Chris Andrews Fern Bay/Shutterstock.com.
