Tuntas dan Telus

State exco defends new quarry fees as operators threaten job cuts

The Perak state government has moved to justify a sharp increase in quarry extraction fees, insisting the new rates are necessary to fund infrastructure and environmental oversight. The move comes after several aggregate operators warned that the revised charges could force them to scale back blasting activity and shed hundreds of workers across the state.

With construction demand still climbing in districts surrounding Ipoh and the Kinta Valley, the standoff has put the state executive council on the defensive. Officials argue that decades of low extraction charges have starved the treasury of legitimate income, while industry players counter that any sudden jump will be passed on to builders, contractors and ultimately home buyers.

How the revised fee structure came about

The new schedule, gazetted earlier this quarter, lifts the per-tonne levy on granite, limestone and other construction aggregate by between 35 and 60 percent, depending on the material and the proximity of the lease to designated water catchment areas. The state exco member in charge of land and mineral resources said the previous rates had not been adjusted for nearly a decade, even as diesel, blasting materials and compliance costs climbed steadily.

Officials point out that the old charges, some of which were set during the commodity boom of the early 2010s, no longer reflect current market prices for crushed stone. By aligning the levy with international benchmarks and accounting for the environmental damage often left behind by unregulated sites, the government expects to raise an additional RM28 million in annual revenue. That money, according to budget papers, is earmarked for road repairs, slope stabilisation and the rehabilitation of exhausted quarry pits.

Industry representatives, however, argue that the consultation period was too short. Several operators told local media that they received formal notification only weeks before the new rates took effect, leaving little room to renegotiate supply contracts that were signed on the assumption of stable extraction costs.

Why operators are pushing back

The quarry sector in Perak directly employs roughly 4,500 people across about 90 active sites, with another 8,000 jobs tied to transport, crushing and downstream concrete production. Operators say a sudden cost increase of this scale cannot be absorbed through efficiency gains alone, and that workforce reductions are now firmly on the table.

In submissions to the state economic planning unit, several companies warned that 10 to 15 percent of their direct hires could be at risk if the new fees remain in place for more than two consecutive quarters. Smaller family-run operations in places like Simpang Pulai and Batu Gajah say they have thin margins and limited capacity to stockpile crushed stone while waiting for prices to adjust.

There is also concern that higher domestic costs will simply shift demand toward imported aggregate from neighbouring states or, in some niche applications, from overseas suppliers. Industry observers monitoring global stone trade flows have noted that cross-border shipments of dressed granite and limestone have already grown in response to tighter domestic supply in several Southeast Asian markets.

The state executive council's defence

Speaking at a press conference in Ipoh, the senior exco member insisted the fee revision was not aimed at squeezing operators, but at correcting a long-standing imbalance. He stressed that Perak has historically under-priced its raw materials compared with Pahang, Johor and Selangor, and that the new schedule simply brings the state into line with regional norms.

The exco also pushed back on the job cut warnings, arguing that the construction pipeline supported by federal projects and private housing schemes will keep order books full. Officials cited ongoing work connected to the Ipoh heritage trail expansion, which is expected to draw additional visitor traffic and stimulate demand for paving stone and decorative aggregate over the next three years.

On the environmental side, the state has committed a portion of the additional revenue to monitoring blasting impacts, dust suppression and the rehabilitation of disused pits. The exco said the fee structure includes a small surcharge dedicated to community health programmes in villages located near active extraction zones, a response to longstanding complaints about air quality and structural damage from repeated blasting.

Australian parallels in resource extraction

Industry observers in Australia have watched the Perak standoff with a sense of familiarity. In Victoria, the state government spent much of the last decade renegotiating extraction royalties after operators in the Latrobe Valley and the granite belts around Ballarat complained that rising fees were eroding already thin margins. The response there, much like the current Perak position, was to tie a portion of the levy directly to rehabilitation funds, a model that mining lobby groups initially resisted but later accepted.

In Western Australia, the Pilbara iron ore giants operate under a different royalty regime altogether, with rates indexed to commodity prices rather than fixed per-tonne charges. Smaller quarry operators in the Perth Hills have long argued that the indexed model gives them breathing room during downturns, a point that has surfaced in several submissions to the Western Australian Department of Mines. The phrase doing the rounds in boardrooms from Perth to Kalgoorlie is the same one you hear in any Aussie pub: that the industry is happy to pay its way, but it wants a fair go and a predictable framework.

The cultural gap is not as wide as it might seem. Malaysian quarry owners and their Australian counterparts speak the same language when it comes to diesel costs, the price of ammonium nitrate, and the constant back-and-forth with environmental regulators. In Adelaide, where the South Australian government recently reviewed its own extractive industries licence structure, stakeholders warned that sudden fee hikes would simply push production across the border, adding to the strain already felt in Sydney's infrastructure pipeline.

Economic stakes for Perak and the construction sector

The quarry industry underpins a significant slice of Perak's construction value chain. From the concrete used in new townships around Seri Iskandar to the road base laid along rural federal routes, aggregate is the silent foundation of nearly every public works project. A sustained price increase would feed into tender bids, potentially adding several percentage points to the cost of highways, schools and affordable housing schemes.

State planners are also weighing the implications for major logistics projects. The proposed expansion at Manjung Port, which has been held up by environmental impact disputes, relies on stable supplies of construction aggregate for quay strengthening and yard surfacing. Any disruption to quarry output could delay the project further, complicating efforts to position Perak as a regional shipping hub.

Downstream, the irrigation and drainage authority has commissioned a flood mitigation study for the lower Perak river basins, a project that will require substantial volumes of rock armour and riprap. If quarry operators cut back production, the state could find itself importing these materials at significantly higher cost, eroding the very revenue the new fees are designed to secure.

Pathways forward and key comparisons

Both sides acknowledge that the current impasse cannot hold for long. With active sites operating on margins that leave little room for absorbing a 50 percent cost increase, the exco has hinted at a possible grace period for small operators and a tiered structure that rewards compliance with reduced environmental incidents. Industry leaders, for their part, have signalled a willingness to negotiate provided the framework is transparent and applied consistently across districts.

A useful reference point is how other Malaysian states have structured their own aggregate levies. The table below summarises the headline rates and key conditions in selected jurisdictions, illustrating the range of approaches currently in use.

State / Region Approximate levy (per tonne) Indexation mechanism Notable conditions
Perak (proposed) RM 2.80 – RM 4.20 Fixed, with environmental surcharge Tiered by material and catchment proximity
Pahang RM 2.20 Annual review Lower rate for certified rehabilitation sites
Selangor RM 3.50 Linked to diesel index Strict dust and noise monitoring
Johor RM 2.60 Fixed, with export surcharge Higher rate for material destined for overseas markets
Kedah RM 1.90 Static Limited environmental conditionality

Practical steps for stakeholders

The state government has invited industry representatives to a formal dialogue session later this month, with the exco indicating that the door remains open to adjustments. Quarry operators, meanwhile, are pressing for a clearer timeline and written guarantees that any concessions will be honoured by the next administration. With construction demand expected to remain firm and several major infrastructure projects in the pipeline, the outcome of these talks will shape the cost of building in Perak for years to come. Follow Perak Insights for continuing coverage of quarry policy, state revenue measures and the construction sector across the state.