Home / World News / Koolyanobbing iron ore mine bailout ‘cost taxpayers $250m’

Koolyanobbing iron ore mine bailout ‘cost taxpayers $250m’

The total cost to taxpayers of bailing out the shuttered Koolyanobbing iron ore mine to save jobs at Esperance port could be more than $250 million, the State Opposition says.

Parliamentary records show the McGowan Government agreed to a range of subsidies and fee-waivers as part of a deal to facilitate the sale of Koolyanobbing from US firm Cliffs Natural Resources to Chris Ellison’s Mineral Resources.

Among them are royalty payments from MinRes for up to 30 million tonnes of iron ore over five years — assistance the Opposition estimates may be worth upwards of $150 million.

The Government revealed it will also pay Southern Ports Authority, which operates Esperance port, almost $63 million in subsidies as a result of a deal that includes discounted port charges for MinRes.

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On top of this, a royalty rebate of $5 million was provided “to reduce the cost faced by Mineral Resources in acquiring Cliffs’ assets and liabilities”, while the Government agreed to free Cliffs from $50.2 million in early termination payments.

In return, MinRes will mine Koolyanobbing for “approximately” five years at a rate of six million tonnes per annum.

Under the terms of the agreement, however, the SPA has agreed to keep on port workers for up to six months in the event MinRes suspends operations.

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Premier Mark McGowan said the closure of Koolyanobbing would have cost taxpayers more than the assistance package.

Mr McGowan said the State would not have got any royalties if the mine stayed closed.

“By rescuing the mine, not only did we save the jobs — taxpayers are better off,” he said.

“It’s clear the Liberals would prefer the State Government simply stand by and allow the mine to close, meaning all the workers would lose their jobs.”

Opposition Leader Mike Nahan said the figures suggested the Government paid “over the odds” to save the mine and associated jobs, which he noted included port workers who were members of the maritime union.

Dr Nahan argued the deal had been too generous to Cliffs, whose share price shot up about 20 per cent on the day the agreement was announced, in large part because it allowed the company to avoid an impairment worth up to $100 million stemming from Koolyanobbing.

“There’s been a lack of transparency about this transaction,” Dr Nahan said.

“It’s been like pulling teeth. They did not give right upfront an adequate statement about the range and depth of the assistance provided to Mineral Resources. And secondly, the assistance to Cliffs Resources was completely over the top.”

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