Rio Tinto and BHP Billiton have agreed to pay higher royalties on their giant iron ore operations in the Pilbara region of Western Australia.

Under the agreement, royalties for fine ore are set at a rate of 5.625% and 7.5% for lump ore.

The deal features amendments that allow the companies to share infrastructure and blend products.

Rio and BHP have agreed to pay a combined payment of A$350m to the State Government’s Consolidated Revenue Fund.

Rio Tinto executive director Sam Walsh said the amendments will deliver profound benefits for its iron ore business and assist in launching the next phase of its Pilbara expansion plans.