The West Australian government has brokered a $250 million settlement with BHP over a royalties dispute.

The government says an audit this year revealed the underpayment of mining royalties of up to $300 million.

Premier Mark McGowan says the settlement follows negotiations with the company, with most of the money to go towards construction of a new women’s and maternity hospital.

“This settlement resolves the dispute with BHP, and I’m pleased we’ve been able to negotiate a very positive outcome for WA taxpayers, with $250 million directed towards worthy projects,” Mr McGowan said.

“I am assured by BHP and its joint venture partners that they did not intentionally seek to minimise royalty payments, and I accept this advice.

“The state government has a strong, long-running relationship with BHP that has benefited all Western Australians.

“We look forward to that relationship continuing long into the future.”

In a statement, BHP said it had contributed more than $11 billion in iron ore royalties in the past decade and more than $3 billion in social and indigenous programs, community infrastructure, and training programs across the state over the last seven years.

The company said there had been no assertion from the government that it had tried to minimise or avoid paying royalties.

“We value our relationships with the WA government and people of West Australia and our priority in this matter has been to ensure a constructive and fair resolution without having to resort to lengthy and costly legal proceedings,” Western Australia Iron Ore Asset President Edgar Basto said.

“We are pleased this has been able to be achieved.”