The West Australian Government and mining giants Rio Tinto Ltd
(ASX:RIO) and BHP Billiton Ltd
(ASX:BHP) have agreed to a new iron ore royalty.
Both miners have agreed to pay iron ore royalties at all their mines at a rate of 5.625% for fine ore and 7.5% for lump ore from July 1, 2010, replacing the old concessional rate.
The two Aussie major’s will also pay a one-off, combined payment of $350 million to the State Government’s Consolidated Revenue Fund.
It is believed that WA premier Colin Barnett used BHP and Rio’s proposed Pilbara iron ore joint venture as leverage to reach an agreement with the miners.
This is because the iron ore joint venture depends on the WA Government agreeing to amend state agreements to allow the sharing of infrastructure and blending of ore across networks in the Pilbara.
The WA Government has agreed to make these state amendments, which means that JV now only faces the hurdles of gaining approvals from Australia and overseas.
Mr Barnett says the agreement is a win for the people of Western Australia providing them with increased value from the state’s resources and creating a level playing field for all iron ore producers in Western Australia.
Rio Tinto’s 2009 profit was slightly up on the year before, while BHP Billiton reported a profit in fiscal 09 which was less than half its result the year before.
