The state royalty dispute between Rio Tinto, BHP and the West Australian Government has been settled.
The two miners have agreed to pay a high royalty rate, which has opened the way for them to integrate their Pilbara iron ore assets.
WA premier Colin Barnett yesterday announced the two miners would pay 5.625% royalties on iron ore fines from 1 July.
This agreed rate is a jump of 3.75% from the previous royalty agreement, which the miners have had instated since the 1960s.
This accord will generate approximately $1 billion for Western Australia over the next four years.
The agreement also included a one off payment of $350 million from the miners, which will be used for the construction of a children’s hospital.
Barnett stated that this was a fair result, adding “had we not done what has been done today, Western Australia would have been essentially selling its iron ore for decades to come at half price, that’s not acceptable.”
However, despite the agreement which approved Rio and BHP’s iron ore joint venture, Barnett said that the merger may still attract stamp duty as well as assessment from the State Taxation Commissioner.
The agreement between the State and the two large miners did not include concessions such as access to their extensive rail network by junior explorers.