Mining and Heavy Industries

Rio, BHP reject WA iron ore payment

Rio Tinto and BHP Billiton have reportedly knocked back an idea from the WA Government to replace their iron ore production levies with an upfront payment.

According to the ABC this week, both mining giants confirmed the government had raised the idea of paying out ongoing lease payments as a single up-front sum.

But both miners rejected the notion, ABC reported.

The ball started rolling on this issue earlier this year when new WA Nationals leader Brendon Grylls said the government should impose a $5 per tonne tax on the two miners, to replace the 25c a tonne production levy listed in their current contracts.

The mining sector has vehemently argued against a 20-fold increase to the levy, but WA premier Colin Barnett has said the levy or its structure may need to be changed.

“[An upfront payment of the levy] is an option but again can I stresss nothing has been agreed,” Barnett told the media this week. “But we are looking at that 25 cent fee because it is an anomaly.

“We are looking at that and discussing it with the companies but that hasn’t progressed very far.”

Also this week, Japan’s biggest steelmaker Nippon Steel & Sumitomo Metals wrote to Barnett to reject the $5 per tonne levy.

Local paper The West Australian says it attained a letter from the steelmaker’s managing executive officer Kazuo Tanimizu, who said his company was watching developments “with utmost concern”.

Tanimizu reportedly said the proposal would present uncertainty for future WA investments, and would jeopardise the competitiveness of WA iron ore in the global market.

“[Such a levy] could even ultimately affect  security of supply of iron ore from WA< which is a concern to us, as our company is also one of the largest buyers of iron ore from WA,” Tanimizu reportedly wrote.

“I understand you have publicly expressed your view against this proposal,” he wrote to Barnett. “I would sincerely appreciate your continued support on this matter.”

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