Mineral resources in New South Wales are mostly owned by the Crown. This means that the royalties and economic benefits from mining contribute to providing services to the people of New South Wales.
Mineral royalties are jointly managed by the Division of Resources and Energy’s Royalty Advisory Services unit and the Office of State Revenue.
What is a royalty?
A royalty is the amount charged by the Crown for the transfer of the right to extract a mineral resource. They are divided into coal royalties, mineral (non-coal) royalties and petroleum royalties.
The royalty rates are prescribed in legislation.
How are royalties collected?
Royalties are collected by the Office of State Revenue via their Royalty Online Service (ROS). The collection of mining royalties is based on 'self assessment', which means it is the responsibility of the mining lease holder to calculate, pay and lodge their returns by the due date.
For all enquiries about the Royalty Online System (ROS) and payment of royalties, contact the Office of State Revenue at email@example.com phone 1300 139 817.
Guidelines about the collection of royalties can be downloaded from: http://www.osr.nsw.gov.au/royalties/mineral/factsheet
When are royalty returns and payments due?
Mining royalties in NSW are payable on minerals, which are divided into coal royalties, mineral (non-coal) royalties, and petroleum royalties. Mineral royalty returns and payment due dates are based on the mineral type. The following shows when the returns are to be lodged and the due dates.
21 of every month
31 July each year
Last day of calendar month
31 July each year
Non-coal > 50,000
30 April (for the period of 3 months ending on 31 March)
Non-coal < 50,000
31 July each year
Royalty & Advisory Services unit
The Division of Resources and Energy's Royalty & Advisory Services unit administers legislation relating to mineral royalty, distributes royalty to private mineral owners and maintains a mining statistics database.
The Royalty & Advisory Services unit can answer questions about allowable deductions, royalty policy, royalty education and how title holders must comply with data and statistical reporting?
The Royalty & Advisory Services unit alsomanagesall disputes regarding royalty payments and issues related to illegal mining.
For further information contact the Royalty & Advisory Service by calling (02) 4931 6433 or emailing firstname.lastname@example.org.
In 2014-15 the royalty revenue generated by the NSW minerals sector was $1.27 billion, with coal accounting for approximately 91% of the total.
Types of royalties
Royalties are levied on all coal recovered in New South Wales, and two types of coal royalties apply:
- Ad Valorem Royalty - Royalty for coal is charged as a percentage of the value of production (total revenue less allowable deductions). The coal ad valorem royalty rates are 6.2% for deep underground mines (coal extracted below 400 metres), 7.2% for underground mines and 8.2% for open cut mines. (Royalty Compliance guidelines are available for download from the section below.)
- Coal Reject Royalty - Royalty is payable if the coal reject is used or disposed of for the purpose of producing energy. Coal reject is defined as a by-product of the mining or processing of coal that has energy value of less than 16 gigajoules per dry tonne or contains more than 35% ash by dry weight. The rate of royalty on coal in coal reject is no more than half the rate applicable to coal.
Royalties are payable at the rate of 10% of the 'well-head value' of the petroleum. The well head is the point where the petroleum reaches the surface and the 'well-head value' is the revenue less certain expenses incurred downstream of the well head.
Mineral (non-coal) royalties
There are two types of mineral (non-coal) royalty:
- Quantum royalty - Quantum royalty is levied at a flat rate per unit of quantity. The rate of royalty is dependent on the mineral being extracted and is generally utilised for low value to volume minerals such as gypsum limestone, and clays.
- Ad valorem royalty - Ad valorem royalty is applied to high value to volume minerals. The base rate applicable for ad valorem minerals is 4% of 'ex-mine' value. The ex-mine value refers to the value of the mineral once it is mined and brought to the surface. In some cases the costs associated with the processing or treatment may be allowable deductions. However, the costs associated with exploration, development and mining of the ore body and the rehabilitation of the site are not allowable deductions.
Privately-owned minerals royalties
Where royalty is collected on minerals not owned by the Crown, legislation requires that 7/8th or 87.5% of the royalty collected is paid to the private mineral owner.