News: NCM Australia state kills plan to hike gold mining tax over job fears

Legislators in an Australian state on Tuesday blocked a proposal to raise hundreds of million of dollars in additional taxes on gold mining after the industry warned the step would spark job losses.

The Labor government in the state of Western Australia wanted to lift royalty rates on gold sales to 3.75 percent from 2.5 percent to raise nearly A$392 million ($305 million) over four years and help repair a budget weighed down by a record deficit.

But the bill was effectively killed after Liberal Party members of parliament voted to block the measure in the state's upper house.

"The notion that this increase would not have a negative impact on the sector was nonsense," said Ian Kemish, a spokesman for Newcrest Mining Ltd (NCM), which employs 1,550 workers at its Telfer mine in the state.

Miners in the world's second-biggest gold mining nation pumped money into large advertising campaigns against the plan, similar to strategies used against past mining taxes. The Chamber of Minerals and Energy released analysis last week claiming the increase threatened up to 3,000 jobs.

Proponents of the increase countered that mining companies were highly profitable based on today's gold prices of around A$1,650 per ounce.

The state last year accounted for about 80 percent of the 287 tonnes of gold mined in Australia, receiving A$250 million in royalty payments.

After the global financial crisis of 2008, a mining frenzy spurred by demand for Australian ores had miners rushing to fill orders. As companies spent billions on new mines and transport infrastructure, politicians took to calling the state the economic engine of the nation.

But cooling growth in China helped turn the boom to bust, leading to massive layoffs and a dramatic drop in state revenue.

($1 = 1.2844 Australian dollars)