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BC Iron welcomes royalty relief

BC Iron's Nullagine joint venture iron ore project in the Pilbara. Picture: Michael Shields/The West Australian.

BC Iron has welcomed much-needed tax concessions from the State Government that it will allow the battling iron ore miner to defer $8-$12 million in royalty payments until next year.

The State Government has agreed to allow BC to defer 50 per cent of royalty payments due from the company's Nullagine joint venture project from October last year to September this year.

The deferred royalty will be repayable in seven equal instalments starting March 31 next year to September 2017.

The concession applies only if the free-on-board price received for BC's ore remains below $A90 a tonne (about $US67 a tonne by today's exchange rate).

BC Iron managing director Morgan Ball said smaller iron ore producers made up an important part of the industry that has, and would continue to, generate revenue and jobs for WA.

"We commend the State Government for providing financial assistance as we seek to implement further cost reduction measures at the Nullagine joint venture during 2015."

WestBusiness understands other iron ore juniors including Atlas Iron, Mineral Resources and Mt Gibson Iron have also applied for similar royalty concessions.

The assistance has raised the ire of ineligible mining giants Rio Tinto and BHP Billiton.

Premier Colin Barnett has chastised the big players for flooding the global market with iron ore despite the price of the commodity falling.

But Mr Barnett has stayed silent on Fortescue Metals Group, which has been a major contributor to the flood of new volumes hitting the market since the start of 2009.

News of the royalty relief for smaller players will come as manna from heaven for the smaller miners, which have found their margins squeezed by falling prices.

Overnight, the benchmark iron ore for immediate delivery to the port of Tianjin in China fell to $US51 a tonne, a fresh seven-year low.

Predictions from various forecasters including Westpac, Deutsche Bank and others that prices will keep falling - possibly to as low as $US40 a tonne - have sparked speculation the Reserve Bank of Australia will cut interest rates again to boost the economy.

BC Iron shares were off 1.3 cents, or 3.5 per cent, to 35.7 cents at 12.05pm while Atlas Iron's shares were off 0.5 cents, or 3.85 per cent, to 12.5 cents. Mt Gibson Iron shares were steady at 22 cents while MinRes shares were off 20 cents, or 2.96 per cent, to $6.55.

FMG shares were off 5.8 cents, or 2.96 per cent, to $1.902 while BHP Billiton shares were down 71 cents, or 2.29 per cent, to $30.32 and Rio Tinto shares had given up 85 cents, or 1.49 per cent, to $56.38.