Overview

Iluka holds a royalty over iron ore produced from specific tenements of BHP's Mining Area C (MAC) province in Western Australia. The royalty results from a 1994 restructure of deferred payments owed to Consolidated Gold Fields Australia.

MAC is a large iron ore mining area located in the Pilbara region in the North of Western Australia, operated by BHP Billiton. The agreement provides for a revenue-based royalty and production capacity payments consisting of:
  • ongoing quarterly royalty payments of 1.232 per cent of ‚ÄčAustralian denominated revenue from the MAC Royalty Area; and
  • a series of one-off payments of AUD$1 million per million tonne increase in the annual production level from the MAC Royalty Area during any 12 month period ending 30 June above the previous highest annual production level.

For information on the MAC royalty’s financial contribution, please refer to the latest company results.

South Flank Development

The South Flank project was approved by BHP in June 2018 and involves the expansion of existing infrastructure at the MAC hub in the Pilbara region of Western Australia. The project is expected to add an additional 80 million tonnes of iron ore production capacity to the hub, in addition to current MAC capacity of around 65 million tonnes. First ore from the project is targeted by BHP for 2021 with a mine life of over 25 years. The proposed South Flank mine pits fall within Iluka’s MAC royalty area and, as such, the same royalty will be applied to revenue from South Flank production as is currently received from MAC.

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