Fortescue's Andrew Forrest calls for iron ore production cap, page-50

....and the attack escalates

Andrew Forrest renews attack on BHP and Rio Tinto over iron ore supply strategy

By Kathryn Diss
Updated about an hour ago
Photo: Andrew 'Twiggy' Forrest says the Australian economy is at risk from a predatory oversupply strategy from Australia's two biggest mining firms. (ABC News: Andrew O'Connor)
Billionaire Andrew Forrest has again taken aim at the nation's two biggest iron ore miners, saying their strategy to flood the market will cost the Australian economy more than $50 billion a year.

The price of the commodity has halved over the past year, caused by a glut in global supply which critics argue BHP Billiton and Rio Tinto have driven by flooding the market to gain more market share.
It has squeezed junior miners, which have struggled to compete with their production costs, which are the lowest in the world.

In an interview with ABC's The Business, Fortescue Metals Group founder and chairman said he was determined to stand up to their strategy.

"It's a bit of one man against a couple of global giants, but I'm after responsibility," Mr Forrest said.
"What's created [is] anything but a free market.

"What's created [is] a manipulated market [that] is the nauseously repeated statement of oversupplying the market, of driving down the iron ore price, of being the last man standing.

"These are statements which you and your audience would never have heard from any responsible chief executive, and we've had two chief executives both saying it at the same time."
Strategy 'ruining Australia's advantage'

He said the price war had destroyed the once strong industry.

"Our very clever game from our boardrooms in London to drive down the iron ore price has actually turned an iron ore industry which was building a country into something like the alumina industry," he said.

"Where you basically keep one nostril above the water line to stop yourself from drowning because the profits there are so small and the taxes raised so little.

"They're not defending us from anyone, Australia is the biggest in the world, they're just completely ruining our advantage."

He said the fall in the iron ore price would cost the Australian economy tens of billions in lost revenue.
"That's like $50 to $60 billion each year you've pulled out of the Australian economy, and so no wonder we are now having our credit rating as a country questioned by leading authorities," he said.

"No wonder our deficits are looking bad, our surpluses are looking decades out, all because a iron ore price game started to be played with a British company who is not responsible for the interests of their host country."
BHP indicates production will slow

Late last month, BHP Billiton became the first of the big three miners to respond to the tumbling price, announcing it would take a "slower path" than previously planned to reach its output target of 290 million tonnes a year.
We've had one company lead a predatory volume strategy to try and drive everyone else out, and in the process is slamming the Australia economy.
FMG chairman Andrew Forrest
Brazil's Vale, the world's largest iron ore producer, last week said it would consider cutting 30 million tonnes from its annual output.

Mr Forrest took particular aim at Rio Tinto with the company yet to follow suit.

"You've seen other multinationals behave responsibly towards Australia, yet we've got one London-based multinational that appears to look at Australia as a play thing," he said.

"We've had one company lead a predatory volume strategy to try and drive everyone else out and in the process is slamming the Australia economy and I'm saying that's totally irresponsible."

Rio Tinto has been contacted for comment.

BHP declined to comment.

Both BHP and Rio have previously argued they are expanding their output to protect Australia's market share, and to prevent other global players from entering the market.

But Mr Forrest rubbished the mantra, saying Australia already controls the iron ore market.

"Australia controls this iron ore price, even Vale follows Australia's lead," he said.

"We're expanding to protect Australia to make Australia more competitive, if that were true how many players do you think have come into the iron industry since they started, since Brazil and Australia got started, how many?

"One. One, and that's Fortescue.

"This is the most protected, heavy barrier to entry industry that's ever existed in the resources world and they're out there saying, we're expanding to defend Australia.

"Well actually they're not, they're expanding to drive the iron ore price down to try and get everyone else out."