BHP Billiton Ltd. (BHP.AU) Chief Executive Marius Kloppers has Wednesday won the grudging cooperation of Western Australian Premier Colin Barnett for the miner's planned iron ore joint venture with Rio Tinto Ltd. (RTP) in the state's Pilbara region.

Barnett, a long time critic of plans to bring the two miner's iron ore operations together, said after meeting Kloppers he now expects the deal to go ahead but will still push for the state to benefit from it through stamp duty and higher royalty charges.

"The state will cooperate," he told reporters after a hour-long meeting with BHP in Perth.

"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.

Western Australia regards the planned joint venture as a change in ownership transaction which should attract stamp duty, Barnett said.

The state also wants decades-old royalty concessions re-negotiated and it expects the BHP-Rio joint venture to pay "full royalty rates" on all iron ore production, he said.

Barnett said the increase in royalties, which could be phased in over several years, may increase state revenues by "hundreds of millions of dollars".

Kloppers "understood our position", Barnett said, but hasn't made any concessions to the state's call for increased iron ore royalties and stamp duty on the transaction.

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

BHP and Rio have said they hope to reach a binding agreement by late this year leading to the joint venture starting operations mid-2010.

The iron ore deal, announced earlier this month, would see the pair form an equal production joint venture which they believe will deliver synergies of more than US$10 billion.

The pair will market the majority of their product separately, a detail of the deal designed to ease competition concerns sparked by the combination of the operations of the world's second and third biggest producers of the key steelmaking input.

Despite this, Rio has highlighted the risk that the pair could be forced to sell some assets to win approval from regulators for the deal.

In a section of the offer document for Rio's US$15.2 billion rights issue outlining potential risks, the miner said the joint venture with BHP is subject to approval by competition regulators in Australia and Europe and that winning approvals could require asset sales.

"Rio Tinto and/or BHP Billiton may be required to divest, or commit to divesting, businesses and/or assets to third parties and/or to make other commitments or concessions to the regulatory authorities which may make the transaction less financially and operationally attractive," Rio said in the document.

Rio also noted that some of the US$10 billion in synergies the pair are targeting will depend on winning the cooperation of existing joint venture partners at the iron ore operations.

The Australia-listed shares of Rio were trading ex-rights Wednesday and, while they fell 21% to A$57.68 by market close, they were only down 0.1% on the ex-rights price of A$57.76 which traders said was a good performance on a day when other miners fell and the broader Australian market ended down 1.5%.

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