Iron ore inquiry sends “terrible signal”
A parliamentary inquiry into iron ore prices will send a “terrible signal” to Australia’s trading partners, the head of mining giant BHP Billiton has warned.
Andrew Mackenzie says any inquiry will place an additional burden on mining companies and be very bad for Australian competitiveness, driving trading partners to invest in other parts of the world.
“This is a ridiculous waste of taxpayers’ money on providing a basic economics course on supply and demand,” he told ABC Radio on Tuesday.
“It’s red tape, pure and simple.”
Iron ore prices have plummeted by more than 60 per cent in the past year, from $US135 at the start of 2014, to well below $US50 a tonne.
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South Australian independent senator Nick Xenophon wants parliament to investigate the volatility in iron ore prices, which has caused havoc for both federal and state revenues.
Fortescue Metals founder Andrew “Twiggy” Forrest claims that mining giants Rio Tinto and BHP Billiton are oversupplying the market to squeeze out smaller operators.
Prime Minister Tony Abbott has said an inquiry could be a good way of getting to the facts, but doesn’t want it to become a witchhunt.
Treasurer Joe Hockey says the government will discuss the call for an inquiry with Labor, other MPs and stakeholders as part of a “carefully thought-through, methodical” process.
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“We are not just going to jump at shadows,” he told ABC radio in Adelaide, adding that it was not about Forrest.
Industry Minister Ian Macfarlane won’t say if he backs an inquiry but says the government isn’t in the business of interfering in the market.
“No one in the government wants to regulate the iron ore market,” he told ABC radio on Tuesday.
Parliamentary secretary Scott Ryan says it isn’t the job of politicians to ensure any company makes a profit.
Some people were trying to create a myth that somehow parliament or government could regulate the iron ore price for their benefit, he said.
“That’s delusional,” he told Sky News.
Mackenzie denied the company was trying to squeeze out smaller players and said he was perplexed the claims were being taken so seriously by the government.
BHP Billiton had slowed its investment amid declining demand but slowing output would be crippling for the company.
Any government intervention in iron ore prices would be an “amazing gift to our competitor Brazil”, he said.
