The organisation representing mining companies says a rise in royalty rates will deter others from setting up operations in New Zealand.
Energy and Resources Minister Phil Heatley says the royalty rate the Government gets is under review because mining companies are not paying a fair amount.
Straterra chief executive Chris Baker says royalties need to be competitive with other similar-sized and remote countries.
"If the royalties rise out of step with international norms then it will absolutely, inevitably and certainly discourage investment in the resource sector."
Mr Baker says it is important to think of the jobs, associated businesses and other financial flow-on effects that come from mining before a decision is made.
Phil Heatley told Television New Zealand's Q+A programme that companies which drill for coal and other minerals are getting off cheaply and the Government is considering whether to increase its royalty levels.
However he said fees for oil and gas companies are unlikely to rise because they pay a fair amount based on this country's remote location.
Mr Heatley said the Government still believes accelerating all forms of exploration by 50% is essential to the economy.
He said that would bring an extra $9 billion into the economy annually, which would go towards education and healthcare.
