Coal royalty raises B.H.P. steel costs

Press, Volume CXV, Issue 33964, 3 October 1975, Page 13

Coal royalty raises B.H.P. steel costs

Zealand Press Association-Copyright

SYDNEY.

The doubling of the New South Wales coal royalty from 50c to SI a tonne, announced in the state Budget on Wednesday, will hasten the return of Broken Hill Proprietary, Ltd, to the Prices Justification Tribunal for a further increase in steel prices.

B.H.P. does not expect to go before the tribunal just because of this extra cost, but a spokesman said that it made the “next visit all that closer.”

It will also have a direct inflationary impact on the prices of a number of cement, brick, tile, food, and tobacco producers. Its immediate effect on the N.S.W. coal producers will be marginal as it can apparently be passed on to customers in most cases—but the longterm impact may prove detrimental to the industry.

The new royaltv rate comes into effect on November 1, and is expected to add an extra s7m to the Government in 1975-76.

BHP. Australia's only steel producer, is currently’ negotiating for a steel price rise, thought to be between 7 per cent and 9 per cent. The higher royalty will add about S4m a year to tiie steel production costs of 8.H.P., but the tribunal will not consider this until it is actually incurred.

The extent of the royalty increase indicates that the N.S.W. coal producers have been singled out for special treatment.

The Government has increased the royalty tenfold since 1971, while the average price paid for N.S.W. coal than trebled. The Government raised the royalty from

|2sc to 50c a tonne in its < 1974 Budget. Most producers, including ’the listed Oakbridge, C.S.R., Austen and Butta. have during this period has less: escalation clauses covering i

Government-type impositions, in their contracts. Exporters say that the additional charge will still make N.S.W. coking coal competitive as a substitute for fuel ioil.