The Australian government said this week that it would not hold a special parliamentary inquiry into iron ore market activity, essentially siding with larger iron ore miners. The decision is a reversal for the conservative government after Prime Minister Tony Abbott said last week he supported a special inquiry.
Independent Senator Nick Xenophon, according to the Wall Street Journal, has been calling for parliament’s economics committee to investigate claims that BHP Billiton and Rio Tinto are driving down prices by increasing supply to undermine smaller competitors, while also delivering a huge financial blow to the Australian government from lost income.
Andrew Forrest, chairman, Fortescue Metals Group, the world’s fourth largest iron ore mine, pushed for the review and expressed disappointment in the decision.
BHP Billiton CEO Andrew Mackenzie said an inquiry would send the wrong signal to international customers about the country’s commitment to free trade.
He said an inquiry would be an “amazing gift” for Australia’s competitors, given iron ore is a globally-traded commodity with other major sources of supply around the world in countries such as Brazil, South Africa, India and China.
Mackenzie reiterated BHP’s strategy was rational, commercial and responsible with the company anticipating, and stating on many occasions, that supply growth would exceed demand growth.
He said BHP Billiton acted early and deferred around 180 million metric tons per year of growth opportunities in 2012.