The mines are exempt from council rates and other charges because they are on land given to the Worimi Local Aboriginal Land Council as conservation lands.

The Port Stephens council, which has asked the State Government for an 8.86 per cent rates increase, confirmed it cannot receive rates from one of the most valuable projects in its area.

If the mine operates for the next 60 years, it has the potential to extract more than 100 million tonnes of sand.

Cr MacKenzie's company, Mackas Sand, is required to pay developer contributions to the council because the mine uses local infrastructure.

Cr MacKenzie said his company also paid generous royalties to the Worimi.

"We wouldn't have won the lease if we didn't," he said.

The most recent valuations available from the NSW Land and Property Management Authority show the Worimi Conservation Lands on Stockton Bight to be worth more than $4 million.

Those valuations are based on the land being zoned for "protection". It would be worth considerably more if the mining project were taken into account.

Based on only the protection valuation, the project would have put $20,000 a year into council coffers.

With an increasing number of sandmining operations being approved on Stockton Bight and elsewhere in Port Stephens, groups including the Tomaree Ratepayers and Residents Association have suggested increasing rates on the mines to raise revenue.

The council is hamstrung because the NSW Department of Local Government classes sandmines as quarries, and special mining rates cannot be applied.

Ratepayers association chairman Bob Young said the company was mining a community resource and should be making a contribution to the community by paying rates.

"Here's an individual who's making more money than anyone else in the whole [local government area]," Mr Young said. "It would be disappointing if there wasn't some form of contribution."