To recover these Crown-owned minerals, miners require a permit from central government. Tier one permits for large operations charge a royalty rate of 2% of revenue on the mineral being mined, or 10% of accounting profits – whichever is higher.

Among politicians, there appears to be consensus on royalty rates.

Since the Crown Minerals Act was passed in 1991, we’ve had three National-led governments (including the current one) and two Labour-led governments. From 1991 to 2023, 11 individuals held the office of Minister for Energy and Resources.

In 1996 Doug Kidd (National) set a royalty of 1% of revenue or 5% of accounting profits. In 2008 David Parker (Labour) removed the accounting profits royalty and set the revenue royalty at 1.5%.

In 2013 Simon Bridges (National) increased this to a 2% royalty on revenue and reinstated an accounting profits royalty of 10%. Megan Woods (Labour) was minister from 2017-2023, during which time settings were left unchanged.

During the 2013 royalties review, civil servants prepared a regulatory impact statement. The document noted the need to compete with comparable jurisdictions (Australia and Canada) for international investment.

Politicians chose the highest royalty rate of those presented. Officials wrote “higher royalty rates were not evaluated as it was judged this would undermine New Zealand’s international competitiveness …”.

Measured by volume and value, the sector’s existing and potential production is indeed concentrated in the hands of big offshore companies, largely from Australia or Canada.

One such company is ASX-listed Bathurst Resources, owned largely by Australians and Singaporeans. The company’s 2024 annual report indicates that over the past five years, annual revenue has averaged about $400 million.

Nearly half of this, 46.30%, has been spent locally procuring goods and services used in mining coal. About 16.69% has gone to wages and salaries, and 16.59% to the owners of the company as profits.

A further 10.95% went to capital purchases, and 9.37% of revenue went to some form of tax, royalty, or fee paid to the Crown.

All up, the New Zealand public and private sectors captured more than 80% of the value of all the coal Bathurst Resources produced. The Crown took the equivalent of 50% of the after tax profits paid to shareholders, some of whom are New Zealanders.

Santana Minerals is listed on both the ASX and NZX. The company is developing a gold resource at Bendigo-Ophir in Central Otago. According to a release the company made to the ASX in February, the gold it hopes to mine is worth about $5.8 billion.

Corporate tax ($979m) and royalties ($400m) combined will mean the Crown take will be about 23% of total revenue. This will equate to about 56% of the total estimated after tax profit of $2.43b, which will go to a mixture of foreign and New Zealand shareholders.

But why can’t all the shareholders be New Zealanders? Well, money. ‘Proving up’ a resource is not cheap.

One exploratory drill hole can cost over $200,000. Finding a mineable resource can require hundreds of drill holes, with no certainty of a financial return. Further investment is required for establishing, operating, and rehabilitating any mine.

There is a limit to New Zealanders’ ability and willingness to bankroll speculative mining projects. Foreign investment is vital if resources are to be discovered and developed.

Through an economic lens, it’s arguably an industry worth having.

The mining sector recorded the highest weekly earnings of all sectors ($1995) in 2024. In the same year it also recorded the highest productivity of all sectors ($526,609) per filled job.

This, while returning many hundreds of millions in taxes and royalties to the Crown. Attracting money from offshore makes this possible, and we compete with other countries to get it.

The same rationale is applied to the film industry, yacht races, and video game development.

Could royalties be higher? Possibly. Would New Zealand remain competitive if they were? Possibly not.

Securing the benefits of mining while getting a fair deal ourselves requires balancing priorities.

With a political consensus on tax and royalty settings that has endured more than three decades, it’s fair to assume that balance is about right.