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BHP: iron ore mine at risk from Nats' tax

AAP logoAAP 14/09/2016 Greg Roberts

BHP Billiton says its plans to invest in a huge new iron ore mine in the Pilbara are threatened by the WA Nationals' proposed new $5 a tonne mining tax.

Continuing the mining industry's aggressive campaign against the tax - as it did when it spent $22 million opposing federal Labor's mining tax in 2010 - BHP said WA Nationals leader Brendon Grylls' plan would cost jobs.

In August, Mr Grylls seized back the party's leadership and controversially proposed the tax that would only apply to BHP and Rio Tinto, which he accused of "not paying their way".

Senior government partner the Liberals and Labor opposition quickly condemned the idea.

But it remains the Nationals' policy.

BHP's 25-year-old 80-million-tonne a year Yandi mine, one of seven it has in the Pilbara, will run out of iron ore in the next five to 10 years and must be replaced to supply customers.

The world's third largest iron ore miner's current plans include developing its South Flank deposit, which would involve the costly construction of an overland conveyor and train line.

"No doubt the commitment required for that is huge," said Andrew Buckley, the general manager of BHP's Jimblebar iron ore mine in the Pilbara.

"By our calculation, if we have a $5 a tonne tax it will take $1.3 billion out of our profit.

"No doubt it would put that South Flank operation or project at risk and also some of our roles both here in Newman and in Port Hedland."

Mr Grylls says the mining majors are getting away with paying a mining lease rental that has not increased from 25 cents a tonne since the 1960s.

That ignored other components such as taxes and royalties, Mr Buckley said, with the latter doubling in 2010 to 7.5 per cent of its value.

He said it also did not acknowledge BHP's contribution to the towns where it operated, including $1.5 billion to Port Hedland and Newman, new housing, a $10 million contribution for a new hospital and a new shopping centre development.

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