The NSW Government has announced plans to amend the State’s coal royalty rates to ensure NSW receives a fair return on its resources under modern market conditions.
From 1 July 2024, coal royalties will be increased by 2.6 percentage points under the new scheme. It will replace the previous government’s emergency domestic coal cap and reservation measures implemented in December 2022.
“These changes will take effect on 1 July 2024 giving the industry time to adjust and upholding the Minns Labor Government’s commitment not to consider royalties changes while emergency measures were in place,” Minister for Finance and Minister for Natural Resources Courtney Houssos said.
The reforms will enhance the State’s fiscal condition by more than $2.7 billion over the four years from 2024 to 2028.
According to the State Government, coal royalties have not increased since January 2009, but international prices have surged, reaching over $500 per tonne in late 2022 due to Russia’s invasion of Ukraine.
“This is a fair outcome for the people of NSW. The old system is out of date. The market has moved on. That’s why we are modernising the state’s coal royalties,” NSW Treasurer Daniel Mookhey said.
The State Government noted that existing discounts for underground and deep underground mining (depths more than 400 metres) will be maintained.
The decision also mitigates a $1.3 billion royalty revenue write-down in the upcoming budget.
The NSW Government plans to utilise the raised funds to rebuild essential services and offer cost-of-living relief.
“The Minns Government is committed to ensuring the ongoing stability of the mining sector, while rebuilding essential services for the people of NSW,” Minister Houssos said.
The development of the new scheme follows an extensive consultation with the mining industry and NSW’s key trading partners.
Minister Houssos stated that coal is an integral part of NSW’s energy mix and a key contributor to the economy.
“Having embarked on extensive consultations with mining companies, industry groups and our trading partners, we have struck the right balance,” Minister Houssos noted.
The announcement is a critical component of the Government’s long-term strategy to balance the need for budget repair, rebuild the State’s essential services, and relieve stress on NSW households and businesses.
“The coal price caps were an emergency measure to keep electricity prices under control during a global energy crisis,” Minister for Energy Penny Sharpe commented.
“Going forward, it’s important our energy sector has certainty about NSW’s policy settings,” Minister Sharpe added.
