Western Australia State Premier Colin Barnett said Wednesday that he expects a planned joint venture between BHP Billiton Ltd. (BHP.AU) and Rio Tinto Ltd. (RIO.AU) to go ahead and hopes the deal will boost state revenue.

But BHP hasn't yet made any concessions to the state's call for increased iron ore royalties and stamp duty on the transaction, Barnett told reporters after meeting with BHP Chief Executive Marius Kloppers.

Barnett said that Western Australia regards the planned joint venture as "a change in ownership and in effect would attract stamp duty".

Kloppers "understood our position", though BHP hasn't made any concessions on the issue, Barnett said.

West Australia wants decades-old royalty concessions renegotiated and it expects the BHP-Rio joint venture to pay "full royalty rates" on all iron ore production, he said.

The increase in royalties, which could be phased in over several years, may increase state revenues by "hundreds of millions of dollar", he said.

Barnett said the state government and BHP haven't yet reached the stage of detailed negotiations, but have agreed to meet every eight weeks or so to discuss the deal.

"The state will cooperate. I mean it is a reality that this merger is going to go ahead so I'm not going to put my head in the sand and pretend it's not happening," Barnett said.

He met with Kloppers for nearly an hour and described the meeting as good.

-By Stephen Bell, contributing to Dow Jones Newswires; 61-8-9244-4243; sgbell@bigpond.com