The royalty agreement reached by the state government with mining giants Rio Tinto and BHP Billiton has reduced BHP's underlying profit by US$126 million.
The royalty agreement reached by the state government with mining giants Rio Tinto and BHP Billiton has reduced BHP's underlying profit by US$126 million.
BHP Billiton has reported a full year profit up strongly to US$12.5 billion today.
However in its end of year report to the Australian Securities Exchange this afternoon, the company said, "Overall operating costs were unfavourably impacted by a weaker US dollar, general inflationary pressure and the ongoing ramp-up of Western Australia RGP4, reducing Underlying EBIT by US$759 million."
"In addition, a provision that relates to proposed amendments to the Western Australian State Agreements reduced Underlying EBIT by US$126 million."
Premier Colin Barnett struck the deal in June.
The two mining companies agreed to pay iron ore royalties at all their Pilbara mines at a rate of 5.625 per cent for fines and 7.5 per cent for lump.
The new rates will apply from July 1 this year and will add $340 million to state revenue in 2010-11 and $1.06 billion over the next four years.
Meanwhile, BHP profit announcement today was slightly below a consensus forecast of $US12.6 billion, but within analysts' range.
The result was 16.3 per cent up on the previous year, but below the record $US15.37 billion profit in fiscal 2008.
BHP Billiton's attributable profit including exceptional items was $US12.7 billion, compared to $US5.9 billion in the previous year.
"BHP Billiton remains cautious on the short term outlook for the global economy," the company said.
The company said it was a "strong set of results" that came despite significant volatility in the macro economic environment.
Despite the volatility, BHP Billiton said it remained positive on the longer term prospects for the global economy, driven by continuing urbanisation and industrialisation of emerging economies.
Net debt at the company fell to $US3.3 billion.
BHP said steel production globally was running ahead of real demand in the quarter ended June 2010, and it expected output to soften from record highs in April.
Underlying earnings before interest and tax (EBIT) rose to $US19.72 billion, from $US18.21 billion in fiscal 2009.
The weaker US dollar dragged on the result though, causing a negative exchange rate impact of $US2.15 billion.
The company declared a final dividend of 45 cents per share, fully franked.
In its segments, iron ore stood out as the highest contributor to underlying EBIT at $US6.0 billion, but was down four per cent on the prior year.
"Overall operating costs were unfavourably impacted by a weaker US dollar, general inflationary pressure and the ongoing ramp-up of Western Australia RGP4," the company said of its iron ore division.
Its petroleum segment had underlying EBIT of $US4.57 billion, up 12 per cent, while aluminium was up 111 per cent, at $US406 million.
Underlying EBIT from base metals was up 259 per cent, to $US4.63 billion.
Metallurgical coal earnings were down 56 per cent, to $US2.05 billion.
"We consider these as a very pleasing set of results," chief executive Marius Kloppers said.
