18/10/2016 - 11:43

Grylls skewers iron ore miners

18/10/2016 - 11:43

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Rio Tinto has hit back at accusations by Nationals WA leader Brendon Grylls that large miners had failed to live up to their contractual obligations in state agreements with the government, after he stepped up his campaign to increase taxes on iron ore production today.

Nationals leader Brendon Grylls has made a new mining tax his signature policy move since retaking the leadership earlier this year. Photo: Attila Csaszar

Rio Tinto has hit back at accusations by Nationals WA leader Brendon Grylls that large miners had failed to live up to their contractual obligations in state agreements with the government, after he stepped up his campaign to increase taxes on iron ore production today.

Mr Grylls made the comments at a Nationals business breakfast this morning, but earned a swift rebuke from the state's largest iron ore miner.

"Through the last decade, the company has contributed more than $265 million to local Pilbara communities," a spokesperson for Rio Tinto said.

"We own and maintain more than 3,370 dwellings in the Pilbara and are a major provider of utilities in the region, supplying sewerage, water and electricity to a number of towns.

"In 2015, we invested more than $22 million across more than 200 community initiatives in WA.

"In addition to this, we also provided $11.8 million of in-kind support."

Rio highlighted a series of local government partnerships, including $12 million of funding for a childcare centre, skatepark and community hub in Paraburdoo, $4.85 million into cultural events iin the City of Karratha, and $17 million into community hubs in Dampier and Wickham.

Earlier today, Mr Grylls said the industry was very different from what Sir Charles Court had envisaged in the 1960s.

“The legacy state agreements afforded enormous obligations on the mining companies that (signed) those agreements in the 1960s, they provided them enormous benefits and enormous obligations,” he said.

“I was reading through Sir Charles Court’s second reading speech from (one) of the mining acts during the week, and in it he talks of some of the obligations for the companies to build the towns and the ports ... $1.7 billion of royalties for regions funding has been used to invest in actually making the Pilbara towns almost up to scratch with what you would consider normal in the southern part of the state.

“I don’t believe the companies have met the obligations set down by Sir Charles Court to build the towns, and they certainly haven't maintained their towns.

“You would've thought that the terms of the original agreements require ongoing investment into those towns."

Another example, Mr Grylls said, was the development of a steel industry in the Pilbara, which had initially been envisaged in the original state agreements.

That plan was abandoned due to a lack of commercial viability.

“If you want to stand on clause 42 that the state agreement should only be changed by mutual agreement between the company and the state, you'd like to think that the obligations of clauses one to 41 had been met,” Mr Grylls said.

“That’s a contract.”

Mr Grylls cited an auditor general’s report from 2004, which said the parliament’s authority to amend or repudiate legislation could not be shackled.

But the report also warns about the consequences of such a move.

“All agreements contain a provision that they cannot be subsequently amended without the consent of the parties,” that report said.

“For parliament to act unilaterally could be seen as a breach of good faith and detrimental to the state’s reputation and interest.”

Responding to concerns about the impact on sovereign risk of unilaterally changing the agreement, Mr Grylls said that Colin Barnett had been in negotiations with the big miners to ask for an upfront payment, which would itself be a change to the agreements.

Mr Grylls has previously been on the record supporting the contribution of Rio Tinto.

That included comments praising Rio Tinto for offering summer internships at Karratha Senior High School and for building apartment complexes for Fifo workers.

Western Power

Mr Grylls did give a strong signal that the Nationals could support a move to sell Western Power, however.

He said the Liberal Party was moving closer to the position of the Nationals that a sale should be used to fund new capital works, although that approach had been highlighted by Treasurer Mike Nahan in the May budget.

He hoped the two parties could go to the election with a unified position on both the mining tax and sale of Western Power, although he did rule out a sale of Fremantle Ports.

Mr Grylls also criticized Labor leader Mark McGowan’s position of funding new capital works without asset recycling.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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