FMG founder and railway builder Andrew Forrest’s campaign against Australia’s major iron ore miners has angered the Minerals Council, but he’s won the support of Joe Hockey and Nick Xenophon, according to reports.
The colourful Fortescue Metals Group chairman has been on the warpath in recent months, accusing majors Rio Tinto and BHP Billiton of flooding the iron ore market with oversupply, and destroying the iron ore industry in the process.
Twiggy sparked the latest round in Australia’s ‘ore war’ with an opinion piece in the Daily Telegraph on Monday.
“I believe in free markets,” Forrest wrote, “but when CEOs pursue business strategies which flood the market, in a last man standing race to the bottom, we don’t have free markets.
“Australians own the iron ore. That’s why the companies which mine it have signed contracts with the State of WA undertaking to maximise its price when they sell it.
“Are the two biggest multinationals, Rio Tinto and BHP Billiton, doing that? Or has their oversupply done nothing more than actually force the price down and threaten the economy of our country?”
The comments were immediately rejected by the Minerals Council of Australia, which represents Rio and BHP, as well as several other miners (but not Fortescue).
Council chief executive Brendan Pearson warned Forrest “is playing a dangerous game pushing for the Federal Government to direct his competitors on how to run their mining businesses in Australia”.
“Mr Forrest’s call for government to remove the ‘license to operate’ for some miners sets Australia on an interventionist path,” Pearson argued on Monday.
“There is no role for government in ‘managing’ the iron ore market. A government direction to reduce Australian output would have a damaging impact on the iron ore sector and on Australia’s reputation as a reliable supplier and as a secure investment destination.”
Despite Pearson’s public derision of Twiggy’s case, the Fortescue chairman did win favour from treasurer Joe Hockey for his troubles.
“I have some sympathy for Andrew Forrest,” Hockey was quoted as saying by the AFR on Monday. “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 iron ore prices].”
And while Hockey’s comments might not bear any material value, another report in Wednesday’s AFR suggested that independent senator Nick Zenophon will call for an urgent senate inquiry investigating the potential of tougher rules governing Rio and BHP in the iron ore sector.
The AFR piece, which was re-syndicated on Xenophon’s website on Wednesday, said Xenophon is drafting the scope of an inquiry, which he plans to put to the Senate on Thursday, May 14.
“I want to look at the economic impact and the implications in terms of the Budget,” Xenophon, who recently listed Forrest’s Monday opinion piece as a ‘must read’ on his website, was quoted as saying.
“These are legitimate questions to ask. Fortescue’s claims need to be tested.”