Caption: The Koorangang terminal in Newcastle, NSW, can export as much as 120 million mt/y of coal. (Photo: Port Waratah)

The Australian state of New South Wales (NSW) will raise coal royalty rates to ensure the state earns a fair return for its resources under modern market conditions. The new scheme will see coal royalties increase by 2.6% points starting July 1, 2024. It will replace the emergency domestic coal cap and reservation measures the previous government introduced in December 2022.

The change is expected to improve the state’s budget position by more than $2.7 billion over the 4 years from 2024 to 2028. “This is a fair outcome for the people of NSW,” said NSW Treasurer Daniel Mookhey. “The old system is out of date. The market has moved on. That’s why we are modernizing the state’s coal royalties.”

Coal royalties in NSW have not increased since January 2009. Since then, international prices have surged, peaking well above $500 per metric ton in late 2022 as a result of Russia’s invasion of Ukraine. International prices  since remained above average, trading consistently above $200/mt.

Existing discounts for underground and deep underground mining (deeper than 400 m) will continue. Under the new system, the rates for open cut, underground and deep underground mining will be 10.8%, 9.8% and 8.8% respectively. The current royalty rate open cut, underground and deep underground mining is 8.2%, 7.2% and 6.2% respectively. The government will use the funds raised to rebuild the state’s essential services, as well as providing families with cost-of-living relief.

“Coal is an important part of the state’s energy mix and a key contributor to our economy,” said Courtney Houssos, Australia’s Minister for Finance and Minister for Natural Resources. “Having embarked on extensive consultations with mining companies, industry groups and our trading partners, we have struck the right balance.”