Australian Grange Resources' Apr-Jun iron ore pellet sales jump despite lower output

BHP Billiton and Rio Tinto have reacted angrily to a proposal from a new political leader in the state of Western Australia to hike the iron ore production rental cost to A$5/mt ($3.80/mt) from the current A25 cents/mt.

Brendon Grylls became the new leader of the Western Australian branch of the National party earlier this week. The Nationals are the smaller partner in coalition governments with the Liberals at both the federal level and in the state of Western Australia.

Grylls has proposed the increase in a bid to generate some A$7 billion for the ailing state's coffers. Western Australia, once the country's mining powerhouse, is now close to being Australia's worst performing state due to the commodities price downturn.

"The Nationals WA believe that the state and taxpayers have facilitated a huge expansion of the iron ore industry at great cost to our state budget and the big miners are not paying their fair share," Grylls said, noting that Rio Tinto and BHP Billiton had "made almost $140 billion since 2010, and Western Australia has facilitated that."

Western Australia's Premier Colin Barnett, whose tenure since 2008 has in some ways followed the trajectory of the iron ore industry, does not support the mining tax rise.

Barnett is seeking a third term as premier at next year's state election. Grylls' proposal was described by Rio Tinto in an emailed statement to the media as an "ill-conceived tax grab" that would put jobs and growth in jeopardy.

BHP Billiton said it did not understand why a "proposal that is so discriminatory and uneconomic would be targeted at two companies."

The miner said it would lose market share in an international iron ore market if it were less able to compete.