BC Iron receives $12m royalty relief

BC Iron is the first Western Australian iron ore miner to receive royalty assistance from the state government’s relief package.

Mines and Petroleum Minister Bill Marmion said BC Iron would receive support in the form of a 50 per cent rebate on eligible hematite iron ore royalties for up to 12 months, in relation to the company’s Nullagine joint venture, subject to the ore price remaining below an average of $90 per tonne over the period.

It will effectively defer between $8 million and $12 million in royalties by about two years.

The deferred royalties are then repayable in seven equal quarterly instalments, with the first repayment due at the end of March next year and the last due in September 2017.

BC Iron managing director Morgan Ball said smaller iron ore producers made up and important part of the industry that has generated revenue and jobs for WA.

“We commend the state government for providing financial assistance as we seek to implement further cost reduction measures at Nullagine during 2015,” Mr Ball said.

Mr Marmion said it wasn’t a handout, but was a temporary relief for mining companies which were actively adjusting their operations.

“Despite recent difficulties, the iron ore sector continues to produce more than 70 per cent of WA’s mineral exports by value and employs almost 60,000 people,” he said.

Requests for royalty relief are assessed by the Department of Mines and Petroleum on a case-by-case basis, through an extensive financial analysis overseen by an independent probity auditor.

The state government’s Royalties for Regions program will fund 25 per cent of the cost of payments, with the same amount to be reappropriated to the program following rebate repayments.

BC Iron shares closed 2.7 per cent lower at 36 cents per share.