Mines and Petroleum Minister Bill Marmion announced on Friday that independent Australian iron ore company Atlas Iron has become the second mining company to qualify for the State Government’s temporary iron ore royalty assistance program after BC Iron Ltd was granted the royalty relief package earlier this year.
The program provides royalty relief in the form of a 50% rebate on eligible haematite iron ore royalties for up to 12 months, subject to the iron ore price remaining below an average of $A90 per tonne over the period.
“This company and its supporters have been working very hard to maintain its Pilbara operations,” Mr Marmion said.
“I am sure that qualifying for this temporary royalty relief will help build on the already extensive efforts to secure workers’ jobs.”
He said the iron ore sector continued to produce more than 70% of WA’s mineral exports by value despite the growing market difficulties.
“While our relief scheme effectively defers half of a miner’s royalty obligations for a year, it’s important to note that the remaining 50% continues a significant royalty flow to the State,” the Minister said.
“In the case of Atlas, the scheme no doubt reinforces the company’s capacity to keep operating, helping secure the livelihoods of hundreds of Western Australian families.”
Atlas Managing Director Ken Brinsden thanked the Government for providing the relief and acknowledging the important roles smaller mining companies played in the State economy.
“The State Government’s royalty relief package supports an important segment of WA’s iron ore export industry, providing jobs, production diversity and ultimately further support for regional communities and the State,” Mr Brinsden said.
“In conjunction with the landmark cost-cutting deal announced last week, this royalty relief significantly strengthens Atlas’ cash position as we continue to build towards our year-end production target of 14-15Mtpa.”
The Minister said the rebates will be fully repayable within two years, with repayments to be made in accordance with a schedule negotiated between the producers and his Department.
“Decisions to enter into royalty rebate agreements are based on detailed financial analysis, including a company’s capacity to make repayments,” Mr Marmion said.
“Assistance is provided only after individual companies sign a funding agreement, which provides extensive protection for the State.”
The Department of Mines and Petroleum is assessing requests for royalty relief on a case-by-case basis. The assessment procedure is overseen by an independent probity auditor and approved by the Minister.