BHP Billiton hikes royalty rate to Western Australia for iron ore

Western Australia and BHP Billiton, agreed on Thursday to increase the royalty rate for iron ore after it amended the State Agreements Acts. The deal, however, is subject to approval by the state's parliament.

Under the amended agreement, BHP would increase its royalty rate for iron ore fines to 6.5 per cent from the current 5.625 per cent by July 1, 2012. The rate would go up further to 7.5 percent after one year to align the royalty rate for fines with current rate for lump ore.

BHP Billiton Iron Ore President Ian Ashby said the amendments will give BHP more certainty in planning and executing its growth projects, especially the proposed Outer Harbour Development. The amendment will increase iron ore royalties by $1.9 billion for Western Australia.

After the Iron Ore Agreements Legislation Bill was introduced in the state parliament on Thursday, unions said the call by the state government for BHP Billiton and Rio Tinto to draw up local participation plans is superficial. Besides the unions, Peter Kenyon, professor of Economic Policy at Curtin University, said the proposed legislation would not ensure the private industry would use local content.

"The state government can sort of guide the private sector without forcing the private sector to do things," The Sydney Morning Herald quoted Mr. Kenyon. "There's a lot to be said for going locally but these companies are big multinational corporations and they've already done a lot of research into getting their supply chains into place and to reopen all that is just a bit too hard," he explained. The bill included a local participation plan due to lobbying by unions for more transparency in miners' tendering processes.

SA Resources Minister Annoyed by Greens' Tactics on Olympic Dam Bill: If the minority party in the South Australia Parliament continues its delaying tactics, much more will be lost for the coffers of the state government, a possibly irked Resources Minister Martin Ferguson said Thursday. "I have worked on this project over a long period of time with the previous premier (Mike Rann) and also the former deputy premier (Kevin Foley)," Ferguson told The Australian.

Legislation for the $30-billion Olympic Dam copper and uranium mine project has already passed through the Lower House of the SA Parliament. It approved an indenture agreement between the SA Government and BHP Billiton which fixes the latter's royalties for the first 45 years at 5 per cent and 3.5 per cent, respectively, for uranium and for other minerals.

The bill is now endorsed to the Upper House, where proponents and supporters expect heavy grill fire from the Greens as they want to introduce about 100 amendments into the bill. "It is about time the Greens got out of the way and stopped trying to obstruct the government's attempts to lock in this project that will underpin the economic strength of South Australia for decades to come. This is yet another example of the Greens op-posing economic development," Ferguson said. "On the one hand, the Greens are happy to spend the proceeds from this type of economic devel-opment but on the other, they continually seek to destroy the industries that generate this wealth and create jobs for thousands of Australians," he added.

"Greens take our role as legislators seriously and will give the bill thorough scrutiny," Greens Leader Mark Parnell said on his Twitter account, accord-ing to ABC News. Parnell made the remark after his meeting with SA Premier Jay Weatherill. Weatherill indicated Parnell assured him the legisla-tion would not be "unduly" delayed.