Gold Fields Ltd. is reviewing its A$100 million annual exploration budget for Western Australia amid the state government's proposal to hike gold royalties by up to 50%, The West Australian reported Oct. 5, citing Stuart Mathews, the company's executive vice president for Australasia.
Mathews said the proposed royalty increase from 2.5% to 3.75% stems from the impression that gold miners are making big profits considering the current strength in gold prices. However, the reality is that the mines are getting deeper and more costly to operate.
"It is an industry based on small margins, and the royalty will significantly erode those margins — something has to give," Mathews said.
The South African gold miner has been investing up to A$100 million per year on exploration in the Australian state, and scrapping this budget will have a direct impact on exploration jobs.
Gold Fields operates the St Ives, Agnew and Granny Smith gold mines in Western Australia, and is developing the Gruyere gold project through a 50/50 joint venture with Gold Road Resources Ltd.