CLEVELAND–CLIFFS AND MINERAL RESOURCES —
KOOLYANOBBING
840. Hon PETER COLLIER to
the minister representing the Treasurer:
I refer to the government's
decision to provide royalty relief to Cliffs Asia Pacific Iron Ore Pty Ltd and
royalty relief and concessions on port fees to Mineral Resources Ltd.
(1) Was Treasury consulted on the
issue before a decision was made?
(2) If yes to (1), did Treasury cost
the financial implications of this decision?
(3) What is the expected value of the royalty relief
provided to Mineral Resources over the term of the agreement?
(4) What is the
expected total value of the package, including royalty relief, operating
subsidy to the port, and forgone contract termination payments?
Hon
STEPHEN DAWSON replied:
I thank the Leader of the Opposition
for some notice of the question.
(1)–(2) Yes.
(3)–(4) The
expected cost of royalty relief and operating subsidy to the Southern Ports
Authority, including forgone contract termination payments, is as follows.
First, there is up to $5 million for
a royalty rebate to Cliffs Asia Pacific Iron Ore Pty Ltd for royalties paid in
the June 2018 quarter.
Second, the 2018–19 budget
forward estimates assumed no royalty revenue from the Cliffs tenements from
2018–19 onwards. Therefore, relative to the 2018–19 budget, no
royalty revenue has been forgone as a result of the royalty relief provided.
However, up to $123.75 million in royalty revenue is potentially forgone—assuming
the ore would be extracted in the absence of the royalty relief, which would
almost certainly not occur under current market conditions—from a full
royalty rebate to Mineral Resources Ltd for the balance of iron ore remaining
in the Cliffs tenements, up to a maximum of 30 million tonnes. This is a notional
cost only.
Third, there is up to $113.1 million
for an operating subsidy to the SPA to comply with the relevant ministerial
direction tabled on 23 August 2018, including a port pricing discount and
forgone termination payments. These costs
are partially offset by new port-related revenue and expenditure associated
with MRL throughput, such that total public sector net debt is estimated
to increase by $76.3 million by 2021–22.