BLOG: Mining delivers much-needed funds to South Coast

The NSW Minerals Council’s (NSWMC) detailed economic survey of its members, conducted by the University of Newcastle and Lawrence Consulting, found that the 21 mining companies surveyed directly spent $956.6 million in the ABS Region of the Illawarra in 2011-12.

In its pre 2013-2014 budget submission to the State Government, the NSWMC is calling on the government to focus on the need to keep mining strong.

Last year’s budget included the surprise imposition of $19.5 million in new annual fees and charges on the industry to fund service and communications improvements in the Division of Minerals Resources and the continued funding of the New Frontiers exploration program. 

Putting aside the fact these fees have delivered little to date in terms of results for the coal and minerals sector, the last 12 months have seen commodity prices fall and further cost increases that have put the industry under significant financial pressure, demonstrated through staff reductions and scaled back production at some operations. 

In this environment the industry is extremely sensitive to any new costs and no new levies should be imposed on the industry in the upcoming budget. 

The Resources for Regions program started with a $160 million funding promise but so far only $9.9 million has been allocated, all to the Singleton and Muswellbrook LGAs. The NSW Government must deliver the promised additional funding in the upcoming budget. 

The recent broadening of the Resources for Regions program from two to nine NSW Local Government Areas is welcome, as is the broadening of the program to include social infrastructure. However, many Local Government Areas associated with mining remain excluded from the program, and this must be addressed. 

The broadened eligibility criteria must not dilute the funding available to the Upper Hunter mining communities of Singleton and Muswellbrook, particularly given the lack of funding for the Upper Hunter through the NSW Government’s Hunter Infrastructure Investment Fund. 

The Mine Safety Levy continues to rise with the 2013-14 mine safety budget expected to increase by 20 per cent to over $35 million – resulting in an increase of more than 100 per cent over the past six years. Despite repeatedly raising concerns about the “blank cheque” approach to the levy over the last five years, there has been little change in the level of transparency. 

The mining industry also remains extremely concerned at the inclusion of funds in the levy for prosecutions against the industry. While NSWMC supports prosecutions against individuals and corporations who behave recklessly, it is unreasonable that an individual or company that may or may not be prosecuted is being asked to pay the prosecution’s costs up front before the case has been heard and determined. 

The Coal Washery Rejects Levy, introduced in November 2009, continues to be an inequitable levy that only applies to two mining operations in NSW. The levy was applied retrospectively to previously approved operations; however, exemptions have been developed so that it only applies to two mining operations. There are very limited viable alternatives for the use of coal washery rejects, and the levy is not directed towards identifying alternatives so it does not encourage innovation; rather it restricts research and development in this area. 

The levy is forecast to raise approximately $16 million this financial year, an increase from $10.53 million in 2010-11. No other Australian state has imposed a similar cost. This inequitable levy should be repealed. 

In the 2008 mini budget, the Government announced the removal of transportation costs from the deductions allowable for the calculation of coal royalties including the: 

• Cost of transport from mine stockpile to port or end user 

• Cost of ship loading and other port charges 

• Demurrage costs. 

The removal of allowable transport deductions has big impact on operations further away from port facilities, reducing their competitiveness and making it harder to support local jobs. 

NSWMC advocates for the permanent reinstatement of the allowable transport deduction in the calculation of royalties, which would provide welcome relief in the current economic conditions.

Stephen Galilee is CEO of the NSW Minerals Council.

To read the full submission, go to: http://www.nswmin.com.au/default.aspx?ArticleID=530