BHP settles $250m royalty dispute with WA Government

Image: BHP

The Western Australian Government has finalised an ongoing dispute with BHP over iron ore royalty deductions.

BHP and its joint venture partners Mitsui and Itochu will pay $250 million to end the stoush, which relates to taxes allegedly owed by iron sales made through the company’s Singaporean marketing arm.

The settlement was made through ‘good faith’ negotiations following an audit by the Department of Mines, Industry and Regulation (DMIRS).

WA Premier Mark McGowan said the parties arrived at a quick settlement intended to avoid protracted and expensive legal proceedings using taxpayer funds.

“This settlement resolves the dispute with BHP, and I’m pleased we’ve been able to negotiate a very positive outcome for WA taxpayers, with $250 million directed towards worthy projects,” McGowan said.

The WA Government will use $230 million of the payment towards building a new women’s and maternity hospital that will replace the King Edward Memorial Hospital.

A further $15 million will be allocated for improvements at Hedland Senior High School, and the final $5 million will be spent on upgrades for Newman Hospital, including extra beds and an expanded procedure room.

“I am assured by BHP and its joint venture partners that they did not intentionally seek to minimise royalty payments, and I accept this advice, and thank BHP for working to resolve this dispute cooperatively with the state,” McGowan continued.

“The state government has a strong, long-running relationship with BHP that has benefited all Western Australians. We look forward to that relationship continuing long into the future.”

In November 2018, BHP settled a similar dispute with the Australian Taxation Office (ATO) regarding taxes owed by its Singapore hub over a 15-year period.

The company agreed to pay $529 million in taxes, and did not admit any liability for tax evasion as part of its settlement conditions.

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