BHP, Rio Tinto Agree To Higher Iron Ore Royalties In Western Australia

21st Jun 2010 07:32

MELBOURNE (Dow Jones)--BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. (RTP) said Monday they have agreed to pay higher royalties on their iron ore operations in Pilbara region of Western Australia. While the agreement with the Western Australian state government isn't conditional on their planned iron ore joint venture proceeding, it looks designed to win support from the government for the deal. Under the agreement, royalty rates will rise to 5.625% of iron ore fines sales revenue from 3.75% previously while the rate for lump will be set at 7.5%. BHP said the change would add A$350 million to the state's consolidated revenue and that, under changes to the state agreements, the two companies would be allowed to share infrastructure and blend products. "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," BHP Chief Executive Ferrous and Coal Marcus Randolph said. The two mining giants were granted concessions on royalty rates under decades old state agreements, which were designed to encourage them to invest in the infrastructure needed to develop the state's vast iron ore resources. -By Alex Wilson, Dow Jones Newswires: 613-9292-2094; [email protected] (END) Dow Jones Newswires June 21, 2010 02:32 ET (06:32 GMT)