Australia’s iron ore inquiry plans ‘unnecessary’, BHP ceo says
BHP Billiton’s ceo Andrew Mackenzie said an inquiry into Australia’s iron ore industry was “unnecessary” as it sends the “wrong signal” to international customers about the country’s commitment to free trade.
Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.
“I believe that free trade is absolutely critical for the future of Australia and its place in the world,” he said in a statement on Tuesday May 19.
His comments follow recent claims made by Fortescue Metals Group (FMG) chairman Andrew Forrest that BHP and fellow mining major Rio Tinto were intent on flooding the iron ore market with product at the cost of the Australian economy. The country’s prime minister, Tony Abbott, was also reported to have supported calls for an inquiry.
Last week, BHP’s vp for iron ore marketing Alan Chirgwin has said that the miner was running its operations with an “economic rationality”.
Mackenzie said an inquiry would be an “amazing gift” for Australia’s competitors such as those in Brazil and South Africa.
“BHP Billiton’s strategy was rational, commercial and responsible with the company anticipating, and stating on many occasions, that supply growth would exceed demand growth,” according to the statement.
Mackenzie added that BHP has deferred around 180 million tpy of growth opportunities in 2012, including 110 million tpy from the Port Hedland outer harbour development and 70 million tpy from two berths in the inner harbour which it did not take up.
Amid the political and industry-wide debate, Metal Bulletin’s 62% Fe iron ore index came back down to $58.53 per tonne cfr China on Tuesday May 19, after hovering around at just above $60 per tonne over the past two weeks.
UBS analyst Daniel Morgan said the inquiry debate was not likely to drive prices one way or another in the short term.
“I don’t know what the inquiry is going to achieve,” he told Steel First.
“[These major miners] are not selling [iron ore] below costs. If they are, and are still adding volumes, that would be a different story,” he added.
Morgan does not see any of the majors abusing their market power.
He expects iron ore prices to go below $50 per tonne cfr again, “but not too far below” as more supply response should be seen when prices reach those levels.
UBS forecast 62% Fe iron ore prices to average at $45 per tonne cfr China for the second half of this year.