Iron Ore (Mount Bruce) Agreement Act 1972

The Company (Mount Bruce Mining Pty Limited and successors): The primary counterparty to the Agreement. Subject to all royalty, infrastructure development, downstream processing, record-keeping, and compliance obligations.

The State of Western Australia: Obliged to grant mineral leases, rights of occupancy, special leases, and other tenure documents as required by the Agreement. The Minister exercises the State's rights and powers under the Agreement.

Hamersley Iron (now Rio Tinto): The parent company of the relevant Pilbara iron ore operations. Clause 5(1) makes the triggering of the Company's major development obligations conditional on the Company ceasing to be majority-owned by Hamersley or its associates.

Native title holders (Banjima, Yinhawangka, and related groups): Federal Court proceedings (Banjima People v State of Western Australia [2013] FCA 868, [2014] FCA 201 and Jones on behalf of the Yinhawangka People v State of Western Australia [2017] FCA 801) determined native title in the Pilbara areas affected by the Agreement and related iron ore agreements.

Local communities: The Agreement requires the Company to develop townsites and port townsites, provide services and facilities to residents, and share infrastructure with the State.

State obligations (clauses 2, 4, 7):

• Introduce and sponsor a Bill to ratify the Agreement.
• Grant the Company rights of occupancy over the entire mining areas.
• Cause the mineral lease to be granted on application.
• Grant special leases, licences, and other tenures as required by the Agreement.
• Provide services and facilities required for the project, subject to the Company bearing the capital cost attributable to the project.

Company obligations (clause 12): The extensive obligations in clause 12 cover:

• Operating any railway in a safe and proper manner and permitting use by third parties and the State on reasonable terms.
• Complying with all applicable laws.
• Maintaining in good repair all works, plant, and equipment.
• Shipping all ore from the mineral lease from the Company's wharf and obtaining the best available price.
• Allowing access through the mining areas to the State and third parties.
• Providing water, power, and other services to residents of townsites on reasonable terms.
• Giving preference to Western Australian labour and contractors where price, quality, delivery, and service are equal.
• Paying royalties on all iron ore shipped, sold, or used in the various forms specified.

Royalties (clause 12(1)(h)):

• Direct shipping ore: 7.5% of f.o.b. revenue, minimum 60 cents per ton.
• Fine ore sold separately: 5.625% of f.o.b. revenue (as varied by section 4A of the Act), minimum 30 cents per ton.
• Fines sold separately: 5.625% of f.o.b. revenue (as varied by section 4A).
• Locally used ore and concentrates used in steel or metallised agglomerate production: 5% of f.o.b. revenue (as varied by section 4A).
• All other ore: 7.5% of f.o.b. revenue without minimum.

Infrastructure development obligations (clauses 5-6): After ownership changes from Hamersley control (clause 5(1) trigger events), the Company must investigate and submit proposals for mining, railway, port, townsite, water, and power infrastructure, and then construct the infrastructure at a cost of not less than $50,000,000 to enable shipment at a rate of at least 1,000,000 tons per annum.

Downstream processing obligations (clauses 31-41): Before the end of year 6 the Company must elect between producing metallised agglomerates or steel. Depending on the election, detailed proposals for establishing and progressively expanding production capacity must be submitted and approved or arbitrated.

Environmental compliance (clause 30): The Agreement does not exempt the Company from compliance with any environmental protection requirement made under any Act.

Minister's approval and refusal powers: The Minister has broad discretionary powers throughout the Agreement, including approving or refusing the Company's proposals for mining operations, infrastructure, port site, and downstream processing plant. Ministerial determinations on port location and port development for general use are final and not arbitrable (clause 5(6)).

Minister's extension of time powers (clause 52): The Minister may extend time periods and dates throughout the Agreement. This gives significant flexibility in managing the project's development timeline.

State's royalty adjustment powers: Various royalty provisions (including subparagraph (viii) of clause 12(1)(h)) provide for adjustment of fixed per-ton royalties in line with movements in specified price indices.

By-law making power (section 4): The Governor, on recommendation of the Company, may make by-laws for the purposes of the Agreement. By-laws may prescribe penalties not exceeding $100 for breach, may be made with binding force of law, and must be laid before Parliament within 6 sitting days.

Arbitration powers (clause 53): Disputes between the Company and the State may be referred to arbitration. The arbitrator may grant interim extensions of time. Arbitral awards on proposal disputes may take effect as deemed Ministerial approval.

The Agreement does not contain general penalty provisions directly enforceable in criminal law. By-laws made under section 4 may carry penalties of up to $100.

The primary enforcement mechanism is the Agreement's termination provisions: if the Company fails to comply with obligations (including failure to have proposals approved within required timeframes, failure to commence construction, or failure to submit required notices), the Agreement may cease and determine. On determination, the Company's rights under the mineral lease and other Agreement rights also terminate.

The arbitration clause (clause 53) provides the dispute resolution mechanism. Either party may refer disputes to arbitration. The arbitrator's award is binding.

The Agreement at clause 3(2)(c) expressly provides that no future Act of the State will increase the Company's royalty or rental obligations. This operates as a constitutional-style protection against unilateral legislative variation of financial obligations.

The Agreement is structured around a series of conditional timelines tied to "year" references (e.g., year 1 = the financial year next following the commencement date, 30 June 1972):

• Year 2: Company must apply for the mineral lease or the Agreement terminates.
• Year 6: Company must elect metallised agglomerates or steel pathway and submit initial proposals.
• Year 8: Submission of expansion proposals and commencement of first stage of metallised agglomerate plant (if elected).
• Year 10, Year 12: Further staged expansion milestones for downstream processing.

After ownership trigger events (clause 5(1)):

• Within 3 years: Company must submit detailed infrastructure development proposals.
• Within 3 years and 5 months: All proposals must be approved/determined or the Minister may give 12 months' notice of intention to terminate.
• Within 2 years of all proposals being approved: Company must construct infrastructure to enable 1,000,000 ton per annum shipment.

Variation agreement timelines: Each variation agreement has its own commencement date. Section 4A (royalty rate changes) commenced with the Iron Ore Agreements Legislation Amendment Act 2010 Part 6. The 2024 Variation Agreement is ratified by section 4E, inserted by No. 38 of 2024.

Government Agreements Act 1979 (WA): The variation agreements (particularly the 1987 Variation Agreement under section 3B) operate without limiting or otherwise affecting the Government Agreements Act 1979. That Act provides a general framework for WA state agreements.

Mining Act 1904 (WA) (since replaced): The mineral lease and rights of occupancy are granted under section 276 of the Mining Act 1904. Section 3(4) of the Ratifying Act disapplies certain Mining Act provisions (section 277(5)) in relation to renewals of rights of occupancy.

Land Act 1933 (WA): Special leases and other land grants are made under the Land Act, as modified by the Agreement.

Public Works Act 1902 (WA): Section 3(3) disapplies section 96 of the Public Works Act to railways constructed under the Agreement. The State may use its resumption powers under the Public Works Act for purposes of the Agreement (clause 3(2)(d)).

Environmental Protection Act 1986 (WA): Clause 30 expressly preserves all environmental requirements applicable to the Company's operations.

Native Title Act 1993 (Cth): The iron ore tenements and infrastructure covered by the Agreement overlap with areas in which native title has been recognised or claimed. The Banjima and Yinhawangka proceedings addressed the interaction between State agreement-based tenements and native title in the Pilbara.

Iron Ore Agreements Legislation Amendment Act 2010 (WA) Part 6: Directly amended the royalty rates in clause 12(1)(h) of the Agreement; also the basis for section 4A of the Ratifying Act.

Ownership trigger conditions (clause 5(1)): Many of the Company's most significant development obligations (infrastructure proposals, downstream processing obligations) are conditional on the Company ceasing to be majority-owned by Hamersley or its associates. Where the Company remains majority Hamersley-controlled, the development triggers in clause 5(1) have not been activated in the same way. Practitioners need to check current ownership structures against the Agreement's conditions.

Protection against royalty increases is limited: While clause 3(2)(c) protects the Company against future legislation increasing royalty rates, the variation agreement mechanism allows the State and Company to agree changes, and Parliament can ratify those changes. The 2010 royalty rate increases under section 4A demonstrate this pathway.

Termination is a real risk: Unlike many commercial contracts, termination of a state agreement does not simply result in damages; it terminates the Company's entitlement to mine, operate infrastructure, and conduct all operations under the Agreement. The multi-stage proposal and approval process creates numerous points at which the Agreement could theoretically terminate.

Arbitration does not cover all disputes: The Minister's decision on port location and port development for general use is expressly made final and not arbitrable (clause 5(6)). Practitioners advising the Company on port-related disputes must note this limit.

f.o.b. revenue definition is complex: The determination of what costs can be deducted from the sale price to calculate f.o.b. revenue involves ongoing judgments by the Minister and potential disputes. Items (1)-(7) of the definition are subject to the Minister's determination of what was "properly incurred"; items not covered by those categories require the Minister's discretionary determination.

By-laws are not subject to usual review: By-laws made under section 4 of the Ratifying Act are not subject to section 36 of the Interpretation Act 1918 (the usual review and disallowance requirements), but must be laid before Parliament within 6 sitting days.

Royalty calculation for direct shipping ore shipment: A shipment of direct shipping ore is sold for $120 per tonne f.o.b. (after allowed deductions). The royalty rate is 7.5% of f.o.b. revenue, so the royalty is $9.00 per tonne. The minimum royalty floor of 60 cents per tonne is well below the calculated amount and does not apply here. The royalty is due in the financial year in which shipment or sale occurs.

Infrastructure proposal dispute: The Company submits detailed proposals for a new port facility, which the Minister wishes to alter. The Minister must give notice of the desired alterations within 2 months. The Company may then elect within 2 months to refer the dispute to arbitration. If arbitration is decided against the Company on port location, the Minister's decision is final (clause 5(6)). If the dispute is on other aspects of port development, the arbitrator's award may substitute for Ministerial approval.

Ownership change trigger: If Rio Tinto (or another major corporate owner through the Hamersley lineage) restructures so that the majority of the Company's shares are held by entities other than Hamersley or Hamersley associates, the clause 5(1)(a) trigger is activated. The Company then has 3 years to submit comprehensive development proposals to the Minister.

Native title considerations: Any new tenement application, lease grant, or infrastructure development under the Agreement in areas overlapping with the Banjima or Yinhawangka native title determinations requires consideration of the Native Title Act 1993, including future act processes. The Agreement itself does not exempt the Company from native title requirements.