Frequently Asked Questions

What is a mineral?

A mineral is a naturally occurring, inorganic solid substance found in the Earth's crust that is formed through geological processes over long periods of time and is composed of various elements and compounds. Examples are gold, zinc, manganese.

What is a royalty?

A royalty is a payment made to the government by a miner for the right to extract and remove the Territory's minerals. It can apply to the quantity of mineral extracted and removed, the revenue the miner receives when they sell the mineral, or the value of the mineral itself.

What is a mineral royalty scheme?

A mineral royalty scheme refers to a system implemented by governments to calculate and collect royalties from miners in return for the minerals they extract.

What are a profit-based and ad valorem-based royalty schemes?

A profit-based royalty scheme is where royalties are calculated on the net value of the mineral extracted or sold after deducting a range of costs. These costs are generally ones associated with extracting, processing and selling the mineral but can also include pre and post mining costs such as exploration and rehabilitation costs.

An ad valorem-based royalty scheme is where royalties are calculated on the value of the mineral extracted or sold only.

Why is government considering changing the Territory’s royalty scheme?

In 2021 government established the Mineral Development Taskforce (taskforce) to identify and investigate opportunities to accelerate investment in new mining projects.

In April 2023 the taskforce released its final report which found that investors view the Territory’s profit-based royalty scheme as complex and a deterrent to investment compared to other Australian and international jurisdictions. The report recommended replacing the Territory’s current mineral royalty scheme with an ad valorem scheme that is simple, competitive, and incorporates modern and contemporary design features.

Government has accepted all the taskforce recommendations in principle and is inviting written submissions from stakeholders to inform the development of a new ad valorem mineral royalty framework.

How much does the Territory currently collect in royalties?

Mineral royalties are a very significant component of the Territory’s own-source revenue, having accounted for approximately 30% of total tax and royalty revenue collected over the past six years (an average $347 million per year).

Royalty collections are also important for Aboriginal people. This is because the Commonwealth Government makes matching payments equal to the amount of royalties received by the Territory for mining on Aboriginal land that is subject to the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) to a fund called the Aboriginals Benefit Account (ABA). These payments to the ABA are then directed to the benefit of traditional owners and other Aboriginal Territorians, including through land councils.

What are royalties used for?

The revenue generated from mineral royalties is used by government to fund public services, infrastructure developments, and other initiatives that benefit the Territory.