Parliament to ratify State Agreement with BHP Minerals

6/4/94

Parliament will today ratify a State Agreement with BHP Minerals to secure a $400 million investment in the further processing of iron ore in Western Australia.

Resources Development Minister Colin Barnett said the Bill was introduced to commit the company to added investment, which would help the State Government fulfil its goal for further processing to account for 20 per cent (by value) of the State's total iron ore exports within 10 years.

The further processing commitment was negotiated as a part of BHP Minerals Pilbara Energy Project - a $300 million energy system involving an underground gas pipeline from Karratha to Port Hedland, a gas-fired power station at Port Hedland and an overhead transmission line from Port Hedland to Newman.

The 140 megawatt power station, as a part of the Pilbara Energy Project, would connect to SECWA's regional power network and supply power to Port and South Hedland, Nelson Point, Finucane Island and Yarrie mining operations.

"The project will provide a significant extension of the gas and electricity grids in the Pilbara and will open the way for future gas-based processing at Port Hedland," Mr Barnett said.

Mr Barnett said the State Government had agreed to discharge the company's Mt Newman processing obligation and consolidate three other processing agreement obligations (Marillana Creek, Mount Goldsworthy and McCamey's Monster Agreements) into a single commitment to further process iron ore.

Mr Barnett said the consolidated agreement would obligate BHP to invest in iron ore processing with a benchmark level of $400 million.  This further processing would relate to the production of iron and steel, direct reduced iron, hot briquetted iron, iron carbide, sinter or pellets.

Mr Barnett said the Labor Government in Cabinet had approved the discharge of one processing obligation (Mount Newman) but announced during the election campaign that all four obligations would be waived in return for the Pilbara Energy Project.

Mr Barnett said the previous Government's decision allowed BHP to only commit to the Pilbara Energy Project.  He said the Coalition Government's decision would allow a further commitment to a multi-million dollar investment in the Pilbara.

Mr Barnett said the Coalition Government and BHP had negotiated that the three iron ore operations would not be able to expand production beyond 15 million tonnes per annum, or 30 million tonnes collectively, until the processing obligation had been fulfilled.

Mr Barnett expected the $400 million investment project would be carried out this decade.

Media contact:  Carolyn Vicars  222 9699