State Agreement with Hamersley Iron over proprosed project at Yandicoogina

24/10/96

Resources Development Minister Colin Barnett said today that the Government had signed a State Agreement with Hamersley Iron Pty Ltd over its proposed iron ore project at Yandicoogina, 90kms north-west of Newman.

Mr Barnett gave details of the State Agreement to Parliament this afternoon during a second reading speech of the Bill.

He told Parliament that the agreement had been negotiated to facilitate the development of the project in the central Hamersely Range area which would provide significant benefits to the State.

Subject to board approval from Hamersley Iron's parent company, RTZ/CRA, construction was due to begin next year and production to start during 1999.

"The agreement provides for the initial production of up to 15 million tonnes per annum of iron ore, with the expected increases to 30 million tonnes per annum subject to market demand," the Minister said.

"The project has a capital cost of $400 million, a construction workforce of more than 400 and an operational workforce of up to 140.

"Annual export earnings of around $300 million are likely at a 15 million tonne per annum rate.

"Provisions in the agreement also require Hamersley Iron and the State to co-operate and consult together on state policies, planning and development objectives, the company's commercial requirements and other relevant issues.

"Western Australia will benefit directly through payroll tax and royalties, with revenue from royalties expected to be around $15 million each year.

"As well, there will be significant indirect benefits to the Pilbara and the State through additional employment and flow-on benefits to support industries.

"Hamersley Iron is also obliged to allow local industry every opportunity to participate in the project in accordance with WA's local content policy announced earlier this year."

Mr Barnett said the agreement also detailed an obligation for the company to build a metallised agglomerate plant once it had mined for 10 years or produced 150 million tonnes of iron ore.

"The State Government is working hard to develop an environment in which downstream processing in the iron ore industry can occur and a number of steps, including deregulation of the energy industry, are contributing to this," he said.

"As a result of this hard work, we will soon see this new phase of the iron ore industry begin, with hot briquetted iron to be produced at Port Hedland by BHP Iron Ore before the end of next year.

"Processing obligations in iron ore agreements provide an important impetus for the iron ore producers to continue to value add and further benefit the State."

Other important features of the agreement include:

·       the initial term of the mining lease will be 21 years with the company having the right to two successive renewals of 21 years;

·       a fixed royalty rate for the first 14 years after which the royalty payable becomes that prescribed from time to time under the Mining Act;

·       royalty reductions of 0.5 per cent for iron ore processed into pellets, one per cent for iron ore processed into metallised agglomerates and two per cent for iron ore processed into steel; and -

·       an 87km railway will be constructed to serve the project and will run westward from the mine and cross the Great Northern highway to link up with the existing Marandoo-to-Dampier railway.

Mr Barnett said that the proposed new mine was located in an area where traditional Aboriginal links with the land remained strong. He said that Hamersley Iron was committed to specifically addressing the concerns of the Aboriginal people and that it had a program for skills training, small business development, community and leadership development and provision of community infrastructure, which would bring benefits to the local Aboriginal people.

Mr Barnett said that WA had been the world's largest exporter of iron ore for the past two years and that the Yandicoogina project would continue to maintain this pre-eminent position well into the 21st century.

He congratulated Hamersley Iron for its role over the past 30 years in helping to develop the Pilbara into a strong resource region and for its contribution to the State. Hamersley Iron recently celebrated its 30th anniversary and is one of the world's major iron ore exporters, producing its one billionth tonne earlier this year.

Media contact: Justine Whittome (09) 222 9699