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Rio Tinto, BHP Billiton Amend Royalties and State Agreements
06/24/2010 - The Western Australian Government, Rio Tinto, and BHP Billiton have signed a Heads of Agreement that will enable greater flexibility and efficiency in managing their iron ore mining operations and infrastructure in the Pilbara.
The Western Australian Government, Rio Tinto, and BHP Billiton have signed a Heads of Agreement that will enable greater flexibility and efficiency in managing their iron ore mining operations and infrastructure in the Pilbara.
Rio Tinto and BHP Billiton 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. These royalties, which will apply from July 1, 2010, are in line with the rates currently specified in the Mining Regulations 1981.
The parties have also agreed to a set of State Agreement amendments that promote efficiency and flexibility for Rio Tinto's and BHP Billiton's current operations, such as the ability to share infrastructure and blend ore across their networks. These amendments are not dependent on their proposed production joint venture proceeding.
The parties to the relevant State Agreements also agreed to make a one-off, combined payment of $350 million to the State Government's Consolidated Revenue Fund.
"This outcome is the result of long and detailed negotiations conducted in good spirit over the past year,” said Premier of Western Australia, The Hon. Colin Barnett MLA. “It is important for a number of reasons: it provides the people of Western Australia with increased value from this State's resources and it creates a level playing field for all iron ore producers in Western Australia."
Sam Walsh, Executive Director, Rio Tinto and Chief Executive of the Iron Ore Group, said: "This result has emerged from an extensive period of consultation and negotiation, and will deliver profound benefits for our iron ore business, our local Pilbara communities, and the State in general. This agreement continues Rio Tinto's drive for operational efficiency, which is important in an increasingly competitive global market. It will also assist us for when we are able to launch the next phase of our Pilbara expansion plans."
The variations to Rio Tinto's and BHP Billiton's State Agreements are subject to the approval of co-venturers under existing joint venture arrangements and the passage of ratifying legislation by the Western Australian Parliament.
