DUMB

Colin Barnett criticises BHP and Rio, says flooding market with iron ore 'dumb'

720 ABC Perth
By Andrew O'Connor
Updated yesterday at 1:23pmThu 19 Mar 2015, 1:23pm

The decision by Rio Tinto and BHP Billiton to flood the market and drive down the iron ore price has been labelled "dumb" by WA Premier Colin Barnett.
The iron ore price dropped to a new low overnight, plunging to just under $US55 a tonne, less than half the State Government's budget forecast of $US122.
Speaking on 720 ABC Perth, Mr Barnett described the approach of Rio, BHP and Brazilian company Vale as "dumb".
"I must say the big iron ore producers have got this dramatically wrong," he said.
"The two big ones in Western Australia and the Brazilians have been putting too much iron ore into the market and they've precipitated a continuing downward trend in iron ore prices."
The slide in prices has slashed royalties to the WA State Government, carving a $7 billion hole in the state budget over the four-year forward estimates.
Mr Barnett said at some stage, the price would stabilise.
But he remained unimpressed by the corporate decision-making that had led to the precipitous decline.
"This has been one of the dumbest corporate plays I think I've ever seen," he said.
Mr Barnett said he believed the companies had charged Chinese buyers very high prices at the peak of the mining boom.
"That was offensive to the Chinese and there's a bit of payback going on at the moment," he said.
"And the state and the people of Western Australia are bearing the cost."
Opposition Leader Mark McGowan said the Premier appeared to be blaming the iron ore companies for his budget problems.
"What's he going on about? Why is he attacking the two biggest employers in Western Australia? Why is he attacking the iron ore industry?" he said.
"The Premier's budget problems are because of him.
"He's the one who's created the debt. He's the one who's created the deficit, the first one in 15 years. No-one else."
Mr McGowan said if the big companies were not exporting a greater volume of iron ore, the royalty returns to the state would be even lower.
Topics: iron-ore, mining-industry, state-parliament, budget, states-and-territories, government-and-politics, wa
First posted yesterday at 1:06pm