It’s war! Fortescue boss calls Australians to oppose BHP, Rio iron ore plans
Fortescue Metals Group (ASX:FMG) chief executive officer and founder Andrew “Twiggy” Forrest has launched an all-out war on rivals BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO) urging Australians to demand the government intervention to stop the miners iron ore expansion plans.
In an editorial written for News.com, the head of the world's No.4 iron ore mining company said BHP and Rio were jeopardizing the economy, accusing them of “callous disregard for Australia.”
The billionaire philanthropist said that because of the reckless actions of the big iron miners he was now “being forced” to lay off more than 100 workers a day in his own company.
"These big companies say they must flood the market next year and the year after and the year after even though it will crash the price further," Forrest wrote. "Every time they say this the price falls again."
Forrest argues that for every dollar lost the economy loses A$800 million ($632m) and the government misses another $300 million ($235m) in company tax revenue. He said funding for everything from education to superannuation is, this way, being put at risk and his own work to boost universities and end Aboriginal disadvantage is being hurt.
He continued his aggressive call-to-arms buy asking Australians to bombard their local members of parliament and question if BHP and Rio should be allowed to even operate in the country.
Reactions to Forrester’s renewed attack on the big miners, as expected, were quick to come. The Minerals Council of Australia said Forrest was playing a “dangerous game” by pushing for the federal government to intervene.
"There is no role for government in 'managing' the iron ore market," the industry group chief executive, Brendan Pearson, said in a statement.
He added a move like that would give "a giant free kick" to Australia's competitors, such as Brazil. “And one thing we know from commodity markets is that once given up, market share is very difficult to win back."
However, Treasurer Joe Hockey has backed Forrest’s call, saying he has some sympathy for him.
"I have a lot of sympathy for the workers who are losing their jobs and I've got a lot of sympathy for a number of companies that have suspended activities as a result of the fall [in prices]," he told Financial Review.
Fortescue, Australia's third biggest iron ore producer, is not an innocent victim in this ongoing war. The company has also contributed to oversupply, recently ramping up production to 164 million tonnes a year.
But at a dinner in Shanghai earlier this year, Forrest said he was "absolutely happy” to cap his production right away and that the other major players should do the same. His comments granted him a probe by the Australian Competition and Consumer Commission on whether he had breached cartel laws.