The Northern Territory (NT) is planning to replace its current mining royalty scheme with a more competitive one. This decision comes after a report found that the current scheme is deterring investment. The proposed new scheme, called an ad valorem-based royalty scheme, is based on the underlying value of the extracted assets and is described as “simple” and providing “investment certainty.” Nicole Manison, the NT’s Minister for Mining and Industry, stated that the change is necessary to remain competitive and attract more mining investment.
The mining industry royalties are the NT’s largest source of income, contributing over 41 percent of the territory’s income in 2019-20. The NT government aims to create a mining industry that is not only profitable but also supports the transition to renewable energy.
In a December 2022 report, the NT’s Mineral Development Taskforce identified nine measures to help the NT achieve its goal of becoming a $40 billion economy by 2030. These measures include changes to the royalty schemes, speedy development of new mines, streamlined access to land, simplified regulatory processes, and the development of a rural-based workforce. The NT government has accepted these recommendations in principle.
The task force predicts that under the current scheme, royalties will significantly decrease after 2030 when the territory’s two large mines are expected to close. To preserve the revenue base, strategic actions must be taken. Currently, about half of the operating mines in the NT pay the minimum royalty, but more than half did not pay any royalty until the introduction of the minimum royalty scheme in 2018-19.
Under the proposed ad valorem-based royalty scheme, royalties will be calculated based on the value of the mineral extracted or sold, rather than deducting various costs from the net value. Mineral royalties account for a significant portion of the NT’s own-source revenue, averaging $347 million per year over the past six years.
The NT government has opened the proposed scheme for public consultation until August 4th.