❓ Question regarding the benefits of the agreement to remove the concessional royalty rate for iron ore fines paid by BHP Billiton and Rio Tinto, and the Premier's approach to the negotiations. The Premier outlines the benefits, historical context, and negotiation process.
AnsweredQoN 330Legislative Assembly
QuestionView source ↗
BHP BILLITON AND RIO TINTO — REMOVAL OF CONCESSIONAL ROYALTY RATE
First, I acknowledge the presence in the gallery of year 6 students from Geraldton Grammar School, including my son Owen. I refer to yesterday’s historic agreement reached by the Liberal–National government that removes the concessional rate of iron ore fines royalties paid by BHP Billiton and Rio Tinto. Mr E.S. Ripper : This is groundhog day! Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT
First, I acknowledge the presence in the gallery of year 6 students from Geraldton Grammar School, including my son Owen. I refer to yesterday’s historic agreement reached by the Liberal–National government that removes the concessional rate of iron ore fines royalties paid by BHP Billiton and Rio Tinto. Mr E.S. Ripper : This is groundhog day! Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT
AnswerView source ↗
There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
I refer to yesterday’s historic agreement reached by the Liberal–National government that removes the concessional rate of iron ore fines royalties paid by BHP Billiton and Rio Tinto. Mr E.S. Ripper : This is groundhog day! Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr E.S. Ripper : This is groundhog day! Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
I refer to yesterday’s historic agreement reached by the Liberal–National government that removes the concessional rate of iron ore fines royalties paid by BHP Billiton and Rio Tinto. Mr E.S. Ripper : This is groundhog day! Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr E.S. Ripper : This is groundhog day! Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Several members interjected. The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
The SPEAKER : Thank you, members! Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr I.C. BLAYNEY : Can the Premier please outline the benefits that this agreement will deliver to the state and outline the approach that the Premier took to the negotiations, which contributed to the very positive result? Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr E.S. Ripper : Without repeating yourself! Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
Mr C.J. BARNETT replied: There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
There are so many good things to say! I thank the member for Geraldton for the question, and, as I said in the answer to the previous question, obviously the very tangible benefit is the funding of the new children’s hospital. If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
If I just go back in time a little, the original agreement acts established in the 1960s for BHP Billiton and Rio Tinto were visionary documents and agreements for their time. They gave the companies long-term security over the natural resource and the rights to develop infrastructure—mine-related rail and port facilities. In return, the companies made commitments to building social infrastructure—basically building the towns of the Pilbara. All of that was a great deal. In recognition of that, the companies were given this concession on royalty rates, and at that time fines were very much a not–preferred iron ore product; there was not a ready market for much of what was potentially produced. It is interesting to note that at the time that those two massive projects were developed—the Tom Price project and the Mt Newman project—both companies were producing just five million tonnes a year. They actually banked and developed the projects on five million tonnes of iron ore. Together, the two companies today are producing 275 million tonnes. Therefore, those agreements, that initial infrastructure and its expansions have been a great success story. However, we are now 50 years on and those agreement acts have become dated. Some of the aspirations, in particular in value-adding, have not been realised. The announcement about a year ago of BHP and Rio to merge their iron ore operations was looked at carefully by government. I recognise that we have moved on. I also recognise that there are now a number of medium-sized and smaller competitive iron ore producers in the area. I also acknowledge that the bringing together of these two iron ore operations will lower their long-term cost of production and allow them to remain highly competitive on international markets. That is in their corporate interest and it is in the interest of all of Western Australia. There are sound economic reasons for supporting this and it puts the two major companies on an equal basis with Fortescue Metals Group, Hancock Prospecting and all other mining operations. Therefore, it is a good outcome and it very much reasserts, as I said, our ownership over those state resources. In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
In terms of the negotiation, this was a big deal. It was a huge deal for BHP Billiton and Rio Tinto. Bear in mind that it started with an attempt by BHP to take over Rio Tinto, so they were dealing with survival. The deal is between the two largest mining companies in the world. The prime product, the jewel in the crown for each company, is the Pilbara iron ore operations. That is what has made those companies world leaders. It was a big deal for them and it was a big deal for the state. Negotiations have gone on for 12 months, and in particular since about February of this year. I commend the negotiators, both on the government side and on the corporate side. The result is a good outcome. We now have the rise in royalties; we have a lump sum payment; and we have a modernisation and opening up of the agreement acts so that they can be productive in the future. I think it is a very good result. I am sure that all people in Western Australia will see benefits from this, not only now but for years to come.
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