BHP Billiton and the Western Australian State Government today announced that they had reached agreement on a new royalty regime for the company’s Pilbara iron ore operations.

The new royalty rates are consistent with the Western Australian Mining Act and will apply to production that is not currently within the scope of BHP Billiton’s plans to expand capacity to 152 million tonnes per annum (Mtpa).

Minister for State Development, Alan Carpenter welcomed the agreement and said he was pleased to see the matter resolved.

“The new royalty arrangement is important for the long term benefit of the Western Australian community,” Mr Carpenter said.

“I’d like to thank Graeme Hunt, President of BHP Billiton Iron Ore for his assistance in reaching this resolution.”

President and Chief Operating Officer Western Australian Iron Ore Ian Ashby said the agreement reflected BHP Billiton’s significant contribution to the iron ore industry.

“Over the past 40 years BHP Billiton and its predecessors have invested over A$14 billion in the development of the Western Australian iron ore industry in the form of housing, roads, airports and schools, as well as the iron ore mines, rail system and the deepwater port at Port Hedland,” he said.

“This agreement clears the way for further expansion of our iron ore operations which will continue to pay dividends to the State and people of the Pilbara region through the generation of increased royalties, employment opportunities and community investment.”

BHP Billiton has completed a Feasibility Study into the expansion of its Pilbara iron ore operations and is currently finalising the development path to increase system capacity to 152Mtpa and beyond.

When this capacity is achieved it is expected that increased volumes, combined with higher rates being applied to some production, will increase royalties by around A$80 million per annum, compared to current levels.  

In FY2005 BHP Billiton Iron Ore paid over A$200 million to the Western Australian Government in royalties and taxes for its Pilbara iron ore operations.