Australians and the economy would be the losers if resources companies cut back on production to boost commodity prices, says BHP Billiton chief executive Andrew Mackenzie.
It was more important that the miners lead the way on innovation and sustainability, given the importance of the resources industry to Australia, Mackenzie said at the Minerals Week event in Canberra today.
Otherwise the nation’s economy would lose out to competitors such as in Brazil.
“It is unproductive for Australia to cut or stall low cost and profitable supply when the cycle drops,” he said.
“It destroys value, penalises shareholders, customers and employees and disrupts the power of open markets.
“It is these markets that induce investment, during times of higher prices, and reduce investment during times of lower prices which is exactly what we have done in our Western Australia iron ore business.”
Mining magnate Andrew Forrest has accused rivals BHP Billiton and Rio Tinto of deliberately pushing down iron ore prices to push out competition, and called for a parliamentary inquiry into the industry, which was rejected.
Those two mining giants are the lowest cost miners and can be profitable at lower prices than any other iron ore miners.
Mackenzie said in his speech today that with each cycle, demand was greater than the previous one and it will continue to rise.
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“But competition to meet that demand will be intense. Most recently, we’ve witnessed China’s deal with Brazil’s iron ore company, Vale,” he said.
“The companies and nations that succeed will be those that are the most productive and can supply at the lowest cost.”
“The economic benefits from mining increased our standard of living and saw Australia emerge as one of the world’s strongest economies and wealthiest nations.”
