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WA and BHP reach royalty agreement

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BHP Billiton and the Western Australian State Government have reached agreement on a new royalty regime for the company's Pilbara iron ore operations.

The new royalty rates are consistent with the Western Australian Mining Act and will apply to production that is not currently within the scope of BHP Billiton's plans to expand capacity to 152 million tonnes per annum (Mtpa).

Minister for State Development Alan Carpenter welcomed the agreement and said he was pleased to see the matter resolved.

"The new royalty arrangement is important for the long term benefit of the Western Australian community," Mr Carpenter said.

President and Chief Operating Officer Western Australian Iron Ore Ian Ashby said the agreement reflected BHP Billiton's significant contribution to the iron ore industry.

BHP Billiton has completed a Feasibility Study into the expansion of its Pilbara iron ore operations and is currently finalising the development path to increase system capacity to 152Mtpa and beyond.

When this capacity is achieved it is expected that increased volumes, combined with higher rates being applied to some production, will increase royalties by around $80 million a year, compared to current levels.

In FY2005 BHP Billiton Iron Ore paid over $200 million to the Western Australian Government in royalties and taxes for its Pilbara iron ore operations.

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