Tony Abbott backs inquiry into whether miners are driving down iron ore price
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Version 0 of 1. Tony Abbott has backed an inquiry into possible “predatory” behaviour by iron ore miners, which has driven down the price of Australia’s single biggest export earner. The iron ore price forecast in Tuesday’s budget was $US48, down nearly 50% on last year’s budget forecast of $US90, leaving a multibillion-dollar hole in the nation’s finances.The Senate this week rejected a bid by independent senator Nick Xenophon for an inquiry, but there is growing support for a joint parliamentary committee to look at the issue. Related: Twiggy Forrest is right: we shouldn't sell our natural resources at bargain basement prices | Richard Denniss “I think we do need an inquiry,” the prime minister said. “We do need to know the facts of what’s going on here.” Abbott said the impact on the economy made it all the more important to ensure there was no “predatory behaviour”. Australia’s No 3 iron ore producer, Andrew Forrest, founder of Fortescue Metals, has launched the Our Iron Ore campaign against multinational companies such as Rio Tinto and BHP Billiton which he says are “choosing to oversupply the iron ore market in the medium term”. He was criticised in March this year after calling for the big two producers to cap their production in order to stabilise prices. Along with Brazilian company Vale, the pair have ramped up supply with the aim of driving less efficient miners out of business. The strategy, when added to slowing demand for the steel-making commodity from China, has seen the sale price fall by more than half in 18 months to around $62 on Friday. Joe Hockey, the treasurer, on Friday lamented that iron ore prices were not at $180 a tonne as they were in 2011. “It has a big impact on our budget bottom line,” he said, adding that in the past 18 months he written down $90bn in revenue. Brendan Pearson, chief executive of the Minerals Council, cautiously welcomed an inquiry but believed the iron ore market was operating in line with market principles. “While the inquiry is arguably not the most effective use of parliamentary resources, it will shine a critical light on a number of false claims,” Pearson said in a statement. He said it would also expose the folly of calls from Forrest for the Australian government to remove his competitors’ “licence to operate”, to reregulate commodity markets and to establish illegal cartel arrangements. The chairman of the Australian Consumer and Competition Commission, Rod Sims, last month said it seemed “misguided” to suggest BHP and Rio Tinto were engineering a fall in prices. The export of Australian iron ore was valued at $74.8 billion in 2013-14. |