Tony Abbott has backpedalled over his support for an iron ore inquiry after Rio and BHP denounced the idea, leading FMG chairman Andrew ‘Twiggy’ Forrest to label his rivals “hysterical”.
Twiggy made his campaign against Rio and BHP very public on Sunday, launching a social media campaign asking Australians to sign the ‘Our Iron Ore’ petition, to let the government know that its people want an inquiry into alleged market flooding by the big two iron ore miners.
The immediate response to ‘Our Iron Ore’ has fallen flat. Since Sunday the campaign had just 684 Facebook ‘likes’ (as of Wednesday) – an objectively insignificant figure.
But one person who responded positively to Twiggy’s campaign was perhaps Australia’s most influential: the prime minister.
Tony Abbott, after talking to Forrest last week, said “we do need an inquiry”.
“I think we do need to know the facts of what’s going on here,” Abbott told Alan Jones on his radio show on May 15, “because I am conscious of the claims that are being made by Andrew Forrest and others.”
When he made that statement, Abbott told Jones that he was “very conscious of the fact that Rio and BHP are Australia’s biggest corporate taxpayers,” and said “I want them to continue paying a lot of tax … and I want them to continue making a lot of profits here in Australia.”
So maybe it should have come as less of a surprise when Abbott, facing pressure from the big miners, backtracked on his support for the inquiry this week.
“Obviously, we believe in the free market and we certainly haven’t made any decision to have an inquiry,” Abbott told a group of reporters on Tuesday.
“This is something that [independent senator] Nick Xenophon was talking about last week.
“The last thing we want is a one-sided inquiry which denigrates into a witch hunt against some of our best companies.”
The prime minister’s comments came after Rio and BHP lashed out at Fortescue’s campaign on a number of fronts.
Rio’s iron ore chief Andrew Harding told staff in a memo last Friday that the allegation of market manipulation through intentional oversupply was “totally unfounded”.
“We operate in a highly competitive global market, where over the last decade, our market share has remained stable at 20%,” Harding was quoted as saying in a number of media outlets.
“We take no comfort from [other industry participants] struggling with the [iron ore market] change and we have also seen some good people leave our company.”
Harding later told the AFR he was “absolutely stunned” by the ‘Our Iron Ore’ campaign.
Former BHP Billiton chairman Don Argus told The Australian that Australia would become a “laughing stock of the world” if an inquiry resulted in the government intervening in the iron ore market.
But perhaps the most significant response came from BHP boss Andrew Mackenzie.
In an interview with Radio National on Tuesday, an unusually curt Mackenzie told host Fran Kelly that an inquiry would be “a ridiculous waste of taxpayers’ money to provide a basic economics course on supply and demand”.
Mackenzie suggested that an inquiry would be a big win for Australia’s ‘real’ rival in terms of iron ore – Brazil. With Chinese premier Li Keqiang visiting Brazil to negotiate trade deals this week, the timing for that argument couldn’t be much better.
In short, Abbott initially said an iron ore inquiry was a good idea. When the big miners, who are also big taxpayers, slammed the idea, he backed off.
Unsurprisingly, Twiggy isn’t at all happy about that.
“I’d ask our lawmakers not to be persuaded by the intensity of the lobbying and scare tactics that are entirely without merit,” the FMG founder told the AFR in a Wednesday report.
Forrest reportedly told the AFR the “ferocity of lobbying” and “hysterical” response from his giant competitors was a campaign to suppress information about the market from Australians, and urged for an inquiry to go ahead.
Nick Xenophon, the independent who proposed an inquiry to Parliament last week, pitched in, saying Rio and BHP were “verging on the hysterical”.
Xenophon believes Australia is right to inquire into an industry which has experienced such an historic price drop.
For Fortescue, market intervention could be the key to future business prosperity. But for now, the inquiry looks on shaky ground, with Abbott’s cabinet reportedly split on the issue, and BHP and Rio mounting a furious rear-guard action to stymie Forrest’s campaign.