Please note: This is an extract from Hansard only. Hansard extracts are reproduced with permission from the Parliament of Western Australia.

Date: Thursday, 24 November 2005

BHP BILLITON (TERMINATION OF AGREEMENTS) AGREEMENT BILL 2005
Introduction and First Reading

Bill introduced, on motion by Mr A.J. Carpenter (Minister for State Development), and read a first time.
Explanatory memorandum presented by the minister.

Second Reading

MR A.J. CARPENTER (Willagee - Minister for State Development) [9.25 am]: I move -

That the bill be now read a second time.

The purpose of the bill before the house is to ratify an agreement between the state and BHP Billiton Ltd and BHP Billiton Minerals Pty Ltd for the termination of an agreement made on 7 October 1952 and subsequently varied, titled the Broken Hill Proprietary Steel Industry Agreement Act 1952; and an agreement made on 18 November 1960 and subsequently varied, titled the Broken Hill Proprietary Company’s Integrated Steel Works Agreement Act 1960, between the state and BHP Billiton Ltd under its former name, Broken Hill Proprietary Company Ltd. This proposed legislation is necessary to terminate legislation that is redundant, since the activities under the agreements have essentially ceased, and it is government policy to remove spent legislation.
To put this in context, I will provide some background on the activities previously carried out under the agreements. From the 1950s onwards, Broken Hill Proprietary Company Limited conducted operations at Kwinana under the two state agreements. Past activities at the site included a steel rolling mill, from the 1950s to 1995, and a blast furnace and pig-iron mill, from the 1960s to the early 1980s. Bulk handling of cargoes for other industries was a major on-site activity from the mid-1980s onwards. BHP undertook operations at Koolyanobbing under the 1960 agreement, which involved mining iron ore that was mainly used to feed its Kwinana blast furnace. The Koolyanobbing mine produced around 25 million tonnes of iron ore until operations ceased in 1983, following the closure of the Kwinana blast furnace. The project remained on care and maintenance between 1983 and 1993, and most of the infrastructure assets were sold. The Koolyanobbing mining operations were excluded from the 1960 agreement in 1990.

In 1994, Portman Ltd recommenced mining at Koolyanobbing following the establishment of a work force accommodation camp, a rail loop, and crushing and screening plants. Portman has expanded the operations at Koolyanobbing over the past decade and is currently increasing production to eight million tonnes per annum. The 1952 agreement covered BHP’s original iron ore operations on Cockatoo Island, which produced around 32 million tonnes of high-grade iron ore over the life of the project. Mining ceased in 1984, but shipping of stockpiled material continued until 1986. In 1994 Portman commenced the Cockatoo Island beneficiation project to process around nine million tonnes of low-grade iron ore that had been stockpiled by BHP. This project was completed in March 2000 and produced about 2.5 million tonnes of iron ore fines that were exported to China. Portman and 50-50 joint venture partner Henry Walker Eltin then commenced mining the remnant high-grade hematite left under BHP’s old mining infrastructure. This produced some 1.6 million tonnes of ore until March 2002. Mining then commenced below the sea level. The operation currently has a capacity to produce 1.2 million tonnes per annum of premium fines ore. The mining on Cockatoo Island has been conducted on mineral leases subleased from BHPB.

As part of an overall rationalisation program, BHPB - formerly BHP - entered into negotiations with the state in 2001 to dispose of the Kwinana site and bulk handling business. BHPB’s objective was to relinquish entirely its on-site assets and obligations, and it sought comfort that the state would use all reasonable endeavours to determine the state agreements. On 27 August 2001, following negotiations between the state and BHPB, cabinet approved the purchase of BHP land at Kwinana by LandCorp and the Fremantle Port Authority, with the FPA purchasing the BHPB bulk handling business. This secured the future use of strategic heavy industrial land at Kwinana to facilitate the establishment of a pig-iron plant, together with the possible establishment of steel making on part of the land by HIsmelt Corporation Pty Ltd.

On 17 September 2001, cabinet approved the execution by the state of a deed of undertaking with BHPB and related entities to facilitate the establishment of the HIsmelt commercial plant at Kwinana. In accordance with the deed of undertaking, the parties entered into a deed of covenant dated 31 January 2002 whereby BHPB assumed the obligations of BHP Steel (AIS) Pty Ltd under the two state agreements.

On 23 August 2004, cabinet approved the execution of an agreement to determine the 1952 agreement and the 1960 agreement -the determination agreement - and the preparation, printing and introduction into Parliament of a bill to ratify the executed agreement.

The determination agreement in schedule 1 of the bill has been executed by the state and BHPB. The agreement provides that the government must introduce a bill into Parliament by 30 June 2005, or such later date as the parties may agree. In mid-2005, BHPB wrote to the Premier agreeing to extend the date by which the determination agreement is required to be introduced into Parliament to 30 June 2006, thus enabling sufficient time for the bill to be considered and ratified by Parliament. Once passed by Parliament, the bill will -

allow the two state agreements to be terminated, as previously agreed to by both BHPB and the state, on and from the date the bill comes into operation as an act;
provide for certain mineral leases on Cockatoo Island set out in the schedule to the 1952 agreement to continue in full force - the leases were subsequently subleased by BHPB to Portman, which is currently carrying out operations on the leases;

grant a full unconditional release of BHPB’s and BHPM’s obligations under the two state agreements, including obligations of BHP Steel (AIS) Pty Ltd under the state agreements assumed by BHPM under the deed of covenant;

grant a full unconditional release of BHPB’s and BHPM’s obligations under former and existing Western Australian legislation to the extent that such obligations were excluded from applying to the activities of BHPB or BHPM under the terms of the 1952 agreement and the 1960 agreement; and

confirm the grant of similar releases of AIS’s obligations by deed of covenant.

I commend the bill to the house.
Debate adjourned, on motion by Mr R.F. Johnson.