Rio Tinto and BHP Billiton will have to clear many hurdles if they are to be successful in entering into a joint venture for their iron ore operations in WA's Pilbara, WA Premier Colin Barnett says.
Rio Tinto confirmed negotiations had collapsed with Chinese company Chinalco and it was set to enter into a joint venture arrangement with the world's biggest miner BHP.
Mr Barnett told reporters in Perth at a state level the companies operated under 20 different state agreement acts which were legislated in the state's parliament.
He said there was a long way to go for the companies.
"To achieve that, if they are to achieve it, there will need to be a number of approvals given,'' Mr Barnett said.
"Internationally they would need the approval of the European Union and possibly the US Justice Department,'' he said.
"At a national level there would be a foreign investment review board approval required and perhaps an Australian competition and Consumer Council approval.
"At a state level there's also a requirement ... because the state is the owner of the iron-ore a fundamental issue.''
Mr Barnett said the state agreements the companies operated under would have to be supported by the state government and the parliament.
"It is the state of Western Australia on behalf of Western Australia's people that owns the iron ore resource,'' he said. "So anything that happens must happen with the agreements of the people and state of Western Australia.
"That is why if they want to physically in anyway merge ... they will require significant changes to the iron ore agreements.''
The premier said he was concerned the joint venture agreement had been structured in part to avoid paying stamp duty of $1 billion.
"This is a serious issue,'' Mr Barnett said.
Mr Barnett said the companies had been operating under iron ore royalty concessions since the 1960s costing WA $300 million a year in royalties.
Job losses could be an implication of any joint venture as the companies mooted a $12 billion savings in their WA iron ore industry operations, Mr Barnett said.
"Obviously job losses are a factor,'' he said.
AAP
