In a report published in The Australian newspaper today, the ASX said it could force the suspension of most of Australia’s listed gold companies if Labor’s royalty increased is passed by the State Parliament.
The suspension would block the gold miners from trading on the ASX until they had provided detailed explanations of the impact the 50 per cent royalty increase will have on the economics of their individual projects.
Earlier this year, the ASX suspended more than a dozen Australian resource stocks after the African nation of Tanzania passed legislation that increased mineral royalties by 50 per cent and introduced requirements for the government to own stakes of at least 16 per cent in mining projects.
The highly respected Fraser Institute’s 2016 annual survey of mining and exploration companies, which ranks international mineral endowments and public policy factors such as taxation and regulatory uncertainty affecting minerals investment, ranked Western Australia 3rd worldwide and Tanzania 64th.
Regional head of AngloGold Ashanti Australia, Mike Erickson, said a 50 per cent royalty increase would have a devastating impact on the reputation of Western Australia as a stable investment destination.
“For decades, Western Australia has been an attractive and stable destination for mining investment but today we find ourselves likened to Tanzania,” he said.
“The threat of such a dramatic increase in royalty payments substantially increases the sovereign risk for investors and undermines confidence in the sector.
“As a global company competing for capital with projects across the globe, decisions like this will make it very difficult for future Western Australian projects to get off the ground.”
In addition to damaging Western Australia’s reputation, Chamber of Minerals and Energy of Western Australia (CME) Chief Executive Officer Reg Howard-Smith said the decision would cost jobs and result in mine closures.
“The State Government needs to understand this decision will have real impacts on working men and women,” he said.
“It will result in some mines closing and workers losing their jobs.
“It is a short-sighted and ill-conceived decision that will do serious long-term damage to our economy.”
