Rio rules out changes to iron-ore levy

PERTH (miningweekly.com) – Iron-ore majors Rio Tinto and BHP Billiton have rejected an offer from the Western Australian government to scrap the existing 25c/t production levy on iron-ore produced in the state in lieu of an upfront payment.

A spokesperson for Rio Tinto confirmed on Tuesday that the Western Australian government had approached the company with a proposal that it could pay out its lease rental in a lump sum. However, the iron-ore producer said that it was not planning to take up the offer.

“Rio Tinto is already making a significant contribution to the Western Australian government. Since 2006 the company has paid A$13-billion in royalties to the Western Australian government – the equivalent of ten new Children’s Hospitals,” the spokesperson told Mining Weekly Online.

A spokesperson for BHP Billiton also confirmed that the company had been approached and said that the major had neither agreed to any changes to the production levy, nor had it any plans to do so.

The proposed changes to the tax levy come in the wake of Western Australia’s Nationals party leader, Brendon Grylls, earlier proposing an increase on the production levy to A$5/t. Both companies have rejected the A$7.2-billion levy increase, warning that it would place jobs at risk.

Western Australian Premier Colin Barnett has ruled out the significant levy increase, but has admitted that the current state agreements with Rio Tinto and BHP Billiton are out of date.

Barnett was quoted by the ABC as saying that an up-front payment was an option, calling the current 25c/t fee an “anomaly”.

Rio Tinto and BHP Billiton are the world’s second- and third-largest iron-ore exporters and have expanded aggressively in Western Australia in recent years. Rio Tinto produced 309.9-million tonnes from its Pilbara operations in 2015, of which its share was 252.7-million tonnes, and it is working towards a 330-million-tonne production target for 2016.

BHP produced 257-million tonnes of iron-ore from its Western Australian operations during the 2016 financial year, of which the company claimed 222-million tonnes as its share.