BHPB, Rio Tinto sign royalties agreement

Mining giants BHP Billiton Ltd and Rio Tinto Group have signed an agreement with the Western Australia government to pay higher royalties on their iron-ore production in the Pilbara region.

From July 1 this year, BHPB and Rio Tinto’s royalty rates will change from 3.75% to 5.625% to bring them in line with other iron-ore producers, and the companies will be able to integrate their Pilbara operations.

The parties have agreed to make amendments to other State agreements that permit sharing of infrastructure and blending of products across the network operated by the companies.

The deal also includes a joint one-off payment to the State government of A$350 million (US$309.6 million).

Both companies said the agreement will allow them to operate with greater efficiency and flexibility.

Marcus Randolph, BHPB ferrous and coal chief executive, said: “The ability to blend iron ore from any of our mines, and the flexibility in the use of all rail and port infrastructure, will be major enablers for our operations.”

Sam Walsh, Rio Tinto iron ore chief executive, said: “This result has emerged from an extensive period of consultation and negotiation, and will deliver profound benefits for our iron-ore business, and our local Pilbara communities.”

WA Premier Colin Barnett said modernizing the agreements reflected the maturity of the iron-ore industry in Western Australia. “This is a win-win deal which gives the companies greater flexibility to integrate their operations and ensures a better return to the community,” Mr. Barnett said.