Agreement benefits Western Australia and iron ore producers.

Agreement between the Western Australian Government and two major iron ore producers BHP Billiton  and Rio Tinto, provides for significant increases in the State’s royalty income and will give the companies flexibility to integrate their Pilbara operations.
 
Over the past 12 months, the Department of State Development has had a leading role in the State Government’s negotiations with the producers over amendments to 12 State Agreements covering both companies’ Pilbara operations.

Western Australian Premier Colin Barnett, announced that a Heads of Agreement, had been signed on 21 June, 2010.

The agreement brings the royalty rate the companies pay for iron ore fines into line with rates paid by other producers, potentially adding $340 million annually to the State’s revenue, and removes a concession applied when the Pilbara industry was in its infancy and fine iron ore was not a valued product in the market.

Legislation to implement this change has been introduced into the Western Australian Parliament.

BHP Billiton and Rio Tinto are considering integrating their Pilbara operations, which have an estimated  combined output value in excess of $25 billion and currently export more than 330 million tonnes of iron ore annually, with growth plans to achieve 500 to 600 million tonnes annually within 10 years.

Should they decide to proceed, this agreement will also facilitate necessary changes to the State Agreements under which they operate.

More information:

See the Premier’s announcement

Find out more about State Agreements.