Two stories relating to how Premier Barnett may be a saviour for...

Two stories relating to how Premier Barnett may be a saviour for BRM and other junior Pilbara IO's.

Story 1 - The West today:

Barnett seeks BHP-Rio tax deal
8th June 2009, 6:15 WST

Premier Colin Barnett has kept the heat on BHP Billiton and Rio Tinto to agree on a deal with the State over stamp duty and mining royalties on their proposed $7.2 billion tie-up of their Pilbara iron ore operations, saying tax concessions “were for first-homeowners” not multinational mining companies.

When announcing the deal on Friday, the companies were keen to highlight the move was a joint venture and not a change of ownership, meaning it would not attract stamp duty, thought to be about $1 billion on a transaction of that size.

However, some analysts questioned that position given that BHP was proposing to pay $7.2 billion for some of Rio’s assets to make the deal a true 50-50 partnership. While Mr Barnett did not want to be “obstructionist”, he expected the State to get a fair deal in terms of jobs, royalties and stamp duty if the plan went ahead.

“Think about people in this State when they buy property, cars, whatever else, and here (the deal) seems to be a contrivance to avoid stamp duty,” he said. “I am singularly unimpressed with that.”

Mr Barnett said he would seek advice from Treasury and the State Solicitor’s office today and would act on it if necessary.

He was adamant the companies would need to do a deal with the State in order to create the world’s biggest iron ore miner and extract an estimated $12 billion in annual savings, saying a similar deal in 1999 had foundered over the same issue.

Mr Barnett also said that given more than 40 per cent of BHP’s profits would stem from WA after the trade he would expect, but not push for, its head office to eventually move to Perth from Melbourne.

Shadow treasurer Ben Wyatt said yesterday there was no realistic argument for Rio and BHP to continue getting concessional rates of 3.75 per cent on their iron ore “fines” as opposed to the industry standard of 5.625 per cent. The discount costs the State about $300 million a year in lost mining revenue.

Rio could not be contacted last night. BHP said its global iron ore office was in Perth and its global headquarters would stay in Melbourne.

Mr reading of this is that Barnett will have plenty of leverage on BHP/RIO regarding implementation of shared haulage and Port . Comments?

Story 2 - AGE this morning looks more closely at this angle.

Bid to derail Rio-BHP exclusivity
Barry Fitzgerald
June 8, 2009

PLANS by Rio Tinto and BHP Billiton to guard jealously the rail and port infrastructure assets of their newly created $US115 billion Pilbara iron ore joint venture from third party access have come under immediate attack.

A coalition of junior iron ore groups and the Western Australian Government are set to use the historic Pilbara alliance of the former arch enemies as leverage to force a third party infrastructure access regime and new royalty arrangements.

The junior alliance — the North West Iron Ore Alliance (NWIOA) — said yesterday that with the Rio-BHP alliance raising the prospect of significant job losses in the Pilbara, it was critical new producers be encouraged to start production by gaining access to Rio-BHP's jointly operated infrastructure.

Alliance deputy chairman Justin Walawski said it was crucial that any new haulage regime should be transparent, efficient and cost effective. A legislated access regime has been under consideration since 2006 when the former WA Labor government established the Pilbara Rail Access Interdepartmental Committee.

While the committee is understood to have made recommendations, they are yet to see the light of day.

"I'm sure the new State Government will seek the committee's recommendations ASAP," Dr Walawski said.

Two alliance members, Atlas and BC Iron, have secured infrastructure deals in the Pilbara. But both deals are with Andrew Forrest's Fortescue Metals, the so-called new force in the Pilbara.

Fortescue has made legal action to gain access to Rio's and BHP's Pilbara infrastructure something of a cause celebre.

Meanwhile, WA Premier Colin Barnett has said that it would take some convincing that the Rio-BHP alliance was in the best interests of Western Australia.

"We are not necessarily going to be obstructionist about the deal but there is a third person at the table here, BHP, Rio and the state of Western Australia," he said on Friday.

But the now cosy Rio-BHP iron ore camp has talked down the ability of the WA Government to seek as much as $1 billion in stamp duty on their deal.

In a briefing on the Rio deal, BHP managing director Marius Kloppers said that there was no "vending event here", indicating stamp duty was a non-issue from the companies' standpoint.

"What we're doing here is … wrapping a contract to share the output around the assets of the two sets of owners," Mr Kloppers said.

Overall, I think Barnett could be a godsend! Comments?