BHP chief says inquiry into Aussie iron ore market a ‘ridiculous waste’
BHP Billiton (ASX:BHP) chief executive Andrew Mackenzie has slammed a proposed parliamentary probe into Australia’s iron ore market, dubbing the idea as a “ridiculous waste of money” that would damage the country’s economy and shift investment to other parts of the world.
“This [inquiry] is a ridiculous waste of taxpayers’ money on providing a basic economics course on supply and demand,” Mackenzie said in a blunt interview on Australian radio on Tuesday.
The boss of the world’s largest mining company also said such a move would send the wrong message to the countries that buy Australia's resources.
"The alliances that are in place for the supply of iron ore would shift primarily away from Australia towards Brazil, where this week the Premier of China is there talking about investment in Brazilian infrastructure," he said. "It would be an amazing gift to our major competitor Brazil[‘s Vale]."
His comments come on the heels of senator Nick Xenophon’s decision last week to pull a vote that could have launched the looming probe, which was triggered by an ongoing verbal dispute between Fortescue’s Metals Group (ASX:FMG) chief executive officer and founder Andrew “Twiggy” Forrest, BHP and Rio Tinto.
On Friday, Tony Abbott, Australia’s prime minister, backed calls for an inquiry, saying it was important to obtain the facts about what was happening in the sector.
But following Mackenzie's radio interview, Abbott appeared to backtrack somewhat, saying no decision had been made. The issue has reportedly split the cabinet with at least two senior ministers privately opposing a parliamentary inquiry.
Prices for the steel making material hit $46.70 a tonne in April, the lowest in a decade, though they have picked up since then to around $59 this week.
Top producers Rio Tinto and BHP, the world's No.2 and No.3 iron ore producers respectively, have been flooding the market as of late, which has left smaller, high-cost producers struggling to survive.
Last week, Forrest asked Australians to “bombard” their members of parliament (MPs) to demand the government intervention to stop the big miners expansion plans.
Hours later, the company launched a Ore this week, seeking to drum up support for his war on Rio and BHP, the world's second- and third-largest iron ore producers respectively.
"Iron ore is Australia's most important single export earner and a dramatically falling price is putting significant pressure on current and future living standards of all Australians," the home page says under the tag: "Damaging our economy.”
The Minerals Council of Australia, which has staunchly opposed an inquiry into the matter, said in a statement Friday that while a probe was arguably not the most effective use of parliamentary resources, at least it would expose false claims made by Forrest.
“A focus on facts rather than rhetoric will enable a rational consideration of the importance of free and open markets and the dangers of interventions in favour of selected producers,” concluded the council’s chief executive Brendan Pearson.