Andrew Forrest
Photo by: Bloomberg
PERTH (miningweekly.com) – Mining magnate Andrew Forrest launched a scathing attack on majors Rio Tinto and BHP Billiton, claiming that the miners’ decision to flood the market with iron-ore could cost the Australian economy between A$50-billion and A$60-billion a year.
In an interview with the ABC’s The Business, Forrest claimed that the multinational companies were acting irresponsibly by continuing to vocalise their decisions to continue expanding iron-ore production in the current market.
“We had a balanced markets of buyers and sellers, but what has driven the market down and created a manipulated market is the nauseously repeated statements of oversupplying the market, driving down the iron price,” the chairperson of Fortescue Metals said in the televised interview.
Forrest noted that the future pricing of iron-ore was also being influenced by continued statements from the CEOs of BHP Billiton and Rio Tinto.
“The game they are playing is to drive down the iron-ore price by chronic assurances that they will oversupply, but they are forgetting that there is an entire country dependent on the iron-ore price.”
Rio Tinto CEO Sam Walsh has indeed maintained that the company would push to increase its Pilbara iron-ore production to 360-million tonnes a year, maintaining that it was in the best interest of shareholders.
“Our Pilbara expansion represents a clear and consistent strategic response to the unprecedented long-term growth in China,” Walsh told a meeting in London during April.
However, Forrest claimed that Chinese demand was unlikely to grow to 1.1-billion tonnes a year in the short term, and, in fact, would remain at between 850-million and 950-million tonnes. He warned that additional production to feed the mirage demand would crush Australia’s market.
Forrest said that the two multinationals should be held accountable by the Australian people, and should be reminded that they did not own the iron-ore being produced, but that it was rather the property of the Australian people.
The Business interview comes shortly after the Australian Competition and Consumer Commission (ACCC) concluded a review of comments made by Forrest in which he called for a cap on iron-ore mining in the Pilbara.
The ACCC decided not to take any action against Forrest, saying the remarks were made ‘off the cuff’, were hypothetical and intended to encourage policy debate.