15/05/2015 - 14:35

PM backs iron ore inquiry

15/05/2015 - 14:35

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Prime Minister Tony Abbott has declared support for an inquiry into the iron ore industry, providing a huge boost for the campaign being waged by Fortescue Metals Group chairman Andrew Forrest against his two biggest competitors.

Prime Minister Tony Abbott.

Prime Minister Tony Abbott has declared support for an inquiry into the iron ore industry, providing a huge boost for the campaign being waged by Fortescue Metals Group chairman Andrew Forrest against his two biggest competitors.

"I think we do need an inquiry," Mr Abbott told radio station 2GB today.

"I think we do need to know the facts of what's going on here because I am conscious of the claims that are being made by Andrew Forrest and others.

"I'm not in the business of demonising any company because I'm very conscious of the fact that Rio (Tinto) and BHP (Billiton) are Australia's biggest corporate taxpayers".

He went on to say "what we don't want to see is predator behaviour by any company".

"We don't want to see irrational behaviour.

"It is against the rules in Australia for businesses to engage in predator conduct like as some people allege is happening here and we'll make sure that the rules are enforced." 

The prime minister’s comments come three days after independent Senator Nick Xenophon proposed an inquiry, citing concern about the activities of BHP and Rio.

They put Mr Abbott at odds with Western Australian Premier Colin Barnett, who has dismissed the concept of an inquiry, despite his strong criticism of the iron ore majors.

“To just simply have an inquiry into the iron ore industry I think is quite pointless,” Mr Barnett said on Wednesday.

“If there is any evidence or any belief there has been anti-competitive behaviour, that should be referred to the ACCC.

“It is not the sort of issue a parliament should be dealing with or can deal with.”

BHP and Rio have argued that the expansion of their iron ore production accords with their long-term growth strategy.

In contrast, Mr Forrest has argued they are flooding the market to drive down prices and force out competitors.

His campaign went up a notch this week when Fortescue and other unknown backers launched the website www.ourironore.com.

“Multinational companies are failing to act in an economically rational way, choosing to oversupply the iron ore market," the website states.

“Australia’s export income is being savaged, along with tax and royalty returns to state and federal governments, shareholder returns, superannuation fund values, jobs and activity in the economy. “

The website invites readers to sign a petition, just days after Mr Forrest called on Australians to write to their MP and call for the government “to consider the multinationals licence to operate in Australia if they don’t market iron ore responsibly for all Australians”.

Minerals Council of Australia chief executive Brendan Pearson sought to put a positive slant on the inquiry, saying it would shine a critical light on false claims made by Mr Forrest.

“It will also expose the folly of calls from Mr Forrest for the Australian government to remove his competitors' 'licence to operate', to reregulate commodity markets and to establish illegal cartel arrangements,” Mr Pearson said in a statement.

“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.

“The MCA is confident that the inquiry will come to the same conclusions as Australia's competition regulator.”

Australian Consumer and Competition Commission chairman Rod Sims said last month that it seemed misguided to suggest BHP and Rio were engineering the fall in prices.

"They are doing what they always have, which is to produce what they have invested in and I am surprised people would think they would do otherwise," he said.

Mr Pearson said misleading claims that Australia can set the global price of iron ore while accounting for only 30 per cent of iron ore production would also be exposed.

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