The Australian state of New South Wales (NSW) said it will raise coal royalty rates to ensure the state earns a fair return for its resources under modern market conditions. The new scheme will see coal royalties increase by 2.6% starting July 1, 2024. It will replace the emergency domestic coal cap and reservation measures the previous government introduced in December 2022.

The change is expected to “improve” the state’s budget position by more than $2.7 billion over the 4 years from 2024 to 2028. “This is a fair outcome for the people of NSW,” said NSW Treasurer Daniel Mookhey. “The old system is out of date. The market has moved on. That’s why we are modernizing the state’s coal royalties.”

Existing discounts for underground and deep underground mining (deeper than 400 m) will continue. Under the new system, the rates for open cut, underground and deep underground mining will be 10.8%, 9.8% and 8.8% respectively. The current royalty rate for open cut, underground and deep underground mining is 8.2%, 7.2% and 6.2% respectively. The government said it will use the funds raised to rebuild the state’s essential services, and to provide families with cost-of-living relief.