Mineral Royalties
Some of the responsibilities of the department and the mining tenement holders in regard to royalties that are set under the Mining Act and State Agreement Acts are outlined below. Mineral production in Western Australia (WA) is very diverse. The range includes some 50 different minerals in commercial production — far greater than in any other State or Territory in Australia.
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Mineral Legislation
The Department is responsible to the WA Minister for Mines and Petroleum for administering mineral royalties under the Mining Act 1978 (WA). The Department also administers royalty arrangements under various State Agreement Acts (specific royalty clauses negotiated for individual projects).
Reporting Requirements
Under the Mining Act legislation, holders of mining tenements are responsible for submitting production reports and royalty returns to the department, as well as maintaining records. Similar obligations are also in place for the various State Agreement Acts.
Production Report
The required timeframe for submitting production reports under the Mining Act to the Director General of Mines is:
- Within 30 days after the expiry of the first quarter during which any mineral is produced or obtained from that mining tenement; and
- Within 30 days after the expiry of each subsequent quarter (whether or not any mineral is produced or obtained from that mining tenement or land in that quarter).
Royalty Return
Under the Mining Act royalty return submissions are required with each royalty payment within thirty (30) days after the end of the relevant quarter. The return must be in an approved form, showing where relevant:
- The quantity of the mineral.
- Details of any sale, transfer, shipment or disposal of the mineral.
- The royalty value of the mineral.
- The gross invoice value of the mineral, when it was paid, and any allowable deductions for the mineral.
The rate of royalty used.
Records
Under the Mining Act, the holder of a mining tenement must keep all records that are necessary to give a true and complete indication of:
- The quantity of the mineral.
- Any sale, transfer, shipment or disposal of the mineral, including time, destination, value and quantity of each sale, transfer, shipment or other disposal.
All records must be kept for a period of seven (7) years.
Royalty Rates and Collection
The Department is responsible to the Western Australian Minister for State Development for administering mineral royalties under various Acts of Parliament relating to the mineral industry.
In Western Australia mineral royalties are payable either under the Mining Regulations 1981 (WA) or various State Agreement Acts . Below are the royalty rates payable on minerals produced within Western Australia.
Mining Act 1978 (WA)
When a mineral is obtained from a mining tenement, or from land the subject of an application for a mining tenement, royalties shall be paid by the holder of, or applicant for, the mining tenement.
State Agreement Acts
State Agreements are essentially contracts between the Government of Western Australia and proponents of major resources projects. The Agreements "package" the rights and obligations of both parties and establish a framework between the State and project proponents.
State Agreements are ratified by an Act of the Western Australian State Parliament.
Rates
In Western Australia there are two systems of mineral royalty collection used:
- Specific rate - flat rate per tonne
- Ad Valorem - percentage of value
Specific rate
Generally, specific rate royalties are used for low value industrial and construction materials. A specific rate or quantity-based royalty is calculated on tonnes produced.
The rates on production between 1 July 2010 and 30 June 2015 are:
- 62 cents per tonne (construction use); and
- 100 cents per tonne (used for its metallurgical content)
In 2015 these rates will be reviewed.
Ad Valorem - percentage of value
The ad valorem or value-based rates of royalty which applies under Regulation 86 of the Mining Regulations 1981(WA) is based on the following principles:
- Bulk material (subject to limited treatment) - 7.5 per cent of the royalty value.
- Concentrate material – (subject to substantial enrichment through a concentration plant) 5.0 per cent of the royalty value.
- Metal - 2.5 per cent of the royalty value.
This system takes into account processing costs incurred after the mine-head point, price fluctuations, the grade of material and the change in the value as mined ore is processed and value is added.
An ad valorem royalty is calculated as a proportion of the ‘royalty value’ of the mineral. The “royalty value” and components used to calculate the “royalty value” are defined under Regulation 85 of the Mining Regulations 1981 (WA).
Payment and Lodgement
Royalty returns can be lodged online if you are an existing Royalties Online customer. If you have not set up a login account to access Royalties Online, go to https://forms.dmp.wa.gov.au/lfserver/anonymous/Client_Registration.
Alternatively, payment may be made by cheque payable to “Mines and Petroleum” and mailed to Mineral House, 100 Plain Street, East Perth 6004. Royalty Return Form including your Payer Reference Code must accompany the payment.
Royalty payments may be paid via Electronic Funds Transfer to the Department of Mines and Petroleum (DMP) account.
Bank: Commonwealth Bank of Australia
BSB: 066-040
Account: 12000048
Please include Payer details and Payer Reference Code on your EFT transaction so that the Department can allocate your payment to the correct project/s.
Due to changes to our Royalties Management System, DMP Regional Offices can no longer accept royalty payments. The only acceptable form of payment method is cheque payment or Electronic Funds Transfer (EFT) as listed above.
