Lithium royalty amendments provide certainty for WA producers

Changes to lithium royalties announced today by the State Government are an important step in supporting the continued expansion of WA’s lithium sector to include downstream processing.

The Chamber of Minerals and Energy of Western Australia’s (CME) Chief Executive Paul Everingham said the updates to the royalty arrangements recognised that WA was moving beyond simply mining and processing and into downstream processing and manufacturing, which had the potential to create thousands of extra jobs for Western Australians.

“The royalty regime was not originally designed to accommodate the extent or scale of downstream processing that is proposed for lithium minerals,” he said.

“The 2015 Mineral Royalty Rate Analysis recommended amendments to the regime to include an ad valorem rate of 3.75 per cent to lithium carbonate.  This approach was strongly opposed by industry given the lack of mathematical basis and the magnitude of cost and effort required for the beneficiation of lithium feedstock.

“CME was actively engaged in the consultation process run through the Department of Mines Industry Regulation and Safety and provided input into how best to address ambiguity in regulations and how to ensure the viability of the emerging lithium industry in WA.

“WA’s lithium industry is investing billions into our local economy and currently employs 4,000 people across the State.

“Certainty around the royalty framework is critical to planning, feasibility and sustainability of these long-term investments, many of which are projects with life spans of 30 to 40 years that will provide jobs and other opportunities for thousands of Western Australians.”

Under the changes, the Mining Regulations 1981 will be amended to implement a five per cent feedstock royalty rate for lithium hydroxide and lithium carbonate, where those are the first products sold by a lithium producer and the feedstock is spodumene concentrate.