Billionaire Chris Ellison’s royalty motza ‘saved jobs’

The WA government has defended the deal that has seen a company controlled by one of Perth’s richest men collect more than $200m in royalty rebates.

Mineral Resources founder Chris Ellison. Picture: Colin Murty

The West Australian government has defended the deal that has seen a company controlled by one of Perth’s richest men collect more than $200m in royalty rebates, saying it was forced to act quickly to save jobs.

The Australian on Thursday revealed that the government’s failure to put an iron ore price cap on its deal that saw Mineral ­Resources take over the Koolya­nobbing iron ore mine near Southern Cross had cost the state hugely in foregone royalties.

MinRes, whose billionaire founder Chris Ellison is the owner of Perth’s most expensive home, continues to have all royalties from the Koolyanobbing mine rebated to it, even though the mine has become wildly profitable off the back of soaring iron ore prices.

WA Mines Minister Bill Johnston told The Australian on Thursday that abrupt closure plans announced by Koolyanobbing’s former owner, US company Cliffs, meant the government had to act in a hurry to secure a future for the mine.

Asked whether MinRes should consider following the path of some major corporations that had handed back their JobKeeper payments and end the royalty rebate ahead of schedule, he said it was a matter for the company.

“I’m sure MinRes is a responsible company and will make decisions based on their view of the needs of West Australians,” Mr Johnston said.

The royalty relief granted to MinRes as part of the scheme was originally forecast to cost about $80m but the sharp rise in the iron ore price now means the company will be refunded at least $218m of royalties.

Those same strong iron ore ­prices saw MinRes make almost $600m in earnings from the mine over the past six months.

Mr Johnston noted that Cliffs had originally said it would close Koolyanobbing at the end of 2018, only to announce with just three weeks’ notice that the mine would close at the end of June 2018.

“The problem was that at the time we were trying to respond to the needs of a large workforce,” he said. “Because of the way Cliffs had behaved, we had to make a ­decision on the spot.”

Liberal MP and former treasurer Mike Nahan has described the Koolyanobbing package as a “very bad deal” for WA taxpayers that would have ignored departmental advice to ensure a price cap was put in place.

The leader of the Greens in WA, Alison Xamon, noted that Mineral Resources had been a significant donor to the Labor Party as well as to the Liberals and the Nationals.

She also said the deal re­inforced the case for restrictions on politicians becoming lobbyists, given MinRes’s head of external relations at the time was former federal Labor resources minister Gary Gray. “It doesn’t instil confidence that decisions are being made in the best interests of the taxpayers of Western Australia,” Ms Xamon said.

MinRes said it had invested ­almost $350m at Koolyanobbing and the Esperance port, and currently employed more than 1100 people across its mine, rail and port infrastructure.