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Western Australian miners in the dark over state election policies


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Western Australian miners in the dark over state election policies

With less than three months until the Western Australian election, it is still unclear as to what the two major political parties will do to bolster the state's resources sector.

While the Liberal Party appears to have no clear mandate, the Labor party has outlined its plan to introduce a Skilled Local Jobs Bill to support jobs growth in industries complementary to the resource sector.

The bill will require a skilled work agreement to be implemented on all major resource projects in Western Australia, including any mining, oil or gas proposal that has a build value exceeding A$200 million.

Meanwhile, the minority National Party has drawn fire from the state's miners over its plan to hike the taxes paid by mining heavyweights BHP Billiton Group and Rio Tinto.

"We're dead set against it," Association of Mining and Exploration Companies, or AMEC, CEO Simon Bennison told S&P Global Market Intelligence.

"We've been running a campaign up in the Pilbara area to make sure people understand that this is a bad idea of [National Party leader Brendon Grylls] and it can't work because he's not going to get the mandate for it to happen."

The National Party wants to return the state budget to surplus by raising the tax paid by BHP Billiton and Rio Tinto on their iron ore mining leases to A$5 per tonne from 25 cents per tonne currently.

According to AMEC, the proposed changes are the "thin edge of the wedge," and could trickle down to affect every other commodity in Western Australia.

The party has, however, vowed not to increase fees or charges for junior miners with less than 20 million tonnes of iron ore production or for miners operating in other commodities.

The Chamber of Commerce and Industry of Western Australia, or CCIWA, believes the move will dent business confidence and investment in the state.

"Governments cannot unilaterally alter state agreements in Western Australia -- proposals like this simply diminish WA's standing in the eyes of the global business community and reduce their appetite to make new investment decisions here," CEO Deidre Willmott said.

"This couldn't come at a worse time because business is trying to turn the corner after months of difficult conditions and we expect this proposal will reverse any green shoots in business confidence."

According to CCIWA, if the increase in iron ore tax is treated as a royalty, it means Western Australia would have to pay more money to the Commonwealth government to be doled out to other states.

"For every A$100 million in additional revenue that this mining tax would deliver the state through increased royalties, Western Australia would redistribute A$89 million through the GST process," Willmott said.

Industry lobbies politicians

AMEC has been in talks with both the Liberal and Labor parties in the hopes of getting a number of legislative changes put back on the table.

A key concern is the current Liberal-National government's refusal to incorporate a transparent pricing and access regime for the Utah Point bulk handling facility in Port Hedland in legislation passed in November. The legislation allows for the sale of the facility following the March 2017 election.

According to AMEC, there is a large variation between port costs for large miners compared to emerging companies, which can often pay around 10% to 20% of the current sale price.

"We want to see a readdressing of the discount arrangements on the port charges at Utah Point and either the full privatization disbanded or else the amendment put through," Bennison told S&P. "That's critically important."

AMEC has raised concerns over the lengthy government approvals process and unnecessary duplication, as well as the high costs and delays caused by native title representative bodies in undertaking heritage surveys.

The organization also wants to see changes made to the Mining Act, payroll tax, stamp duty and shire rates, and issues around fly-in, fly-out workers resolved.

The Aboriginal Heritage Amendment Bill and the Mining Legislation Amendment Bill were two of the 20 pieces of proposed legislation that did not pass through the Western Australian Parliament this year.

The organization wants reforms to the Aboriginal Heritage Act that will deliver more streamlined processes and reduce the regulatory burden and red tape.

"We're committed to working closely with whoever comes back into government to get these policy initiatives across the line because we see them all as a win-win for both the industry and the other stakeholder groups," Bennison said.

In early November, the Newspoll published by The Australian placed the Labor Party in front with a two-party lead of 52% compared to 48% for the Liberal-National coalition.