BHP settles dispute over iron ore royalties with Western Australia in $175m deal

World’s largest miner BHP (ASX:BHP) has settled a A$250 million ($175m) dispute over allegedly underpaid royalties on iron ore shipments sold through its Singapore marketing hub with the state of Western Australia.

The claimed discrepancy was discovered during a government audit in January. At the time, authorities said the payments stretched back over more than a decade.

BHP settled last year a similar dispute with the Australian Taxation Office (ATO) regarding taxes owed by its Singapore hub over a 15-year period.

“This settlement resolves the dispute with BHP, and I’m pleased we’ve been able to negotiate a very positive outcome for WA taxpayers,” Western Australia Premier Mark McGowan said in a statement.

The state will use A$230 million of the payment towards building a new women’s and maternity hospital that will replace the King Edward Memorial Hospital.

A further A$15 million will be allocated for improvements at Hedland Senior High School, and the final A$5 million will be spent on upgrades for Newman Hospital, including extra beds and an expanded procedure room.

In November, BHP settled a dispute with the Australian Taxation Office, also related to the miner’s Singapore marketing hub, paying A$529 million and agreeing to change the division’s ownership structure. The Tax Office had initially claimed the company owed $1 billion.