RIO Tinto and BHP Billiton hiked their royalty payments to the Western Australian government yesterday, in an important step towards merging their operations in the region.
The companies have agreed to pay 5.625 per cent of sales revenue in royalties, up from 3.75 per cent, starting on 1 July.
The companies will also make a one-off payment of A$350m (£208m) to the State, which has said it will spend the money on a hospital in Perth.
The deal clears a big hurdle for Rio and BHP’s plans to set up a US$116bn (£78bn) joint venture in Western Australia, in which the companies hope to share transport and iron ore operations.
A separate competition investigation into the venture is ongoing, amid fierce debate over an Australian mining “super-tax”.
The premier of Western Australia, Colin Barnett, said: “This outcome is the result of long and detailed negotiations conducted in good spirit over the past year.”
Marcus Randolph, chief executive of ferrous and coal at BHP Billiton, said: “This will improve our operating efficiency and we are pleased to be able to share the gains from this enhancement with the people of Western Australia.”