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Gold miners appoint adviser in royalty fight

WESTERN Australian lobbyist the Gold Royalties Response Group has stepped up its fight against pr...

Kristie Batten

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The report will assess the economic contribution of the gold mining sector to the WA economy and will be included in the GRRG's submission to the government in the ongoing review of royalty rates.

Norton Gold Fields CEO and GRRG spokesman Dianmin Chen said the group was aiming to show the government how important the industry was to regional WA and the broader state.

"Deloitte's modelling will be used to get a clear understanding of the direct economic contribution of the gold sector to the WA economy; any flow-on or indirect economic contribution; and the share of state value added gross state product, employment, wages and export activity made up by the sector," he said.

"It is anticipated that the model results will confirm the substantial contribution the gold sector makes to the regional economies in Western Australia," he said.

According to Department of Mines and Petroleum data, WA gold miners produced close to 70% of Australia's total gold output in the past five years, with last year's contribution accounting for nearly 6.5% of total global production.

The data also suggested the sector directly employed almost 22,500 people in 2012-13, making it the second-largest employer in WA's minerals sector.

Last month, GRRG found that most WA gold mines owned by the majors were not globally competitive on costs, being above the 50th percentile, based on JP Morgan analysis.

The research covered Newmont Mining's Boddington and Jundee mines, KCGM's Super Pit, Barrick Gold's Plutonic and Kanowna mines, Gold Fields' Yilgarn South, Agnew and St Ives operations, Newcrest Mining's Telfer mine and AngloGold Ashanti's Sunrise Dam - accounting for up to 75% of WA output.

Based on these mines, the research found that about 1.4 million ounces, or 30% of WA gold production, was above current spot prices, while a further 1.4Moz from Boddington and the Super Pit were on the margin.

Jundee was the best performer in the bunch, with all-in costs of $1003 per ounce, closely followed by Agnew with costs of $1066/oz.

GRRG successfully fought a proposed royalty rise in 2010.

Last year, WA banked $5.1 billion in mineral and petroleum royalties, which generated 21% of government revenue.

Gold royalties accounted for just $218.9 million of the total and it has been reported that Premier Colin Barnett referred to the 2.5% gold royalty rate as "a little light on".

The pressure on the government to cut spending, increase revenue and reduce debt increased last month when Standard & Poor's cut WA's prized AAA credit to AA+.

As well as Norton, the members of GRRG are Doray Minerals, Evolution Mining, Gold Fields, Newmont Asia Pacific, Northern Star Resources, Ramelius Resources, Regis Resources, Silver Lake Resources and St Barbara, and the group is working with other industry bodies over the proposed increases.

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