AUSTRALIA’S big iron ore miners are on a path towards “self-destruction” and could leave the country with a case to answer before the World Trade Organisation, the head of North America’s largest iron ore miner has warned.
Lourenco Goncalves, chief executive of US iron ore miner Cliffs Natural Resources, yesterday told the Global Iron Ore and Steel Forecast conference in Perth the surge in iron ore supply from producers such as BHP Billiton, Rio Tinto and Fortescue Metals could send the price of Australia’s most important export to permanently lower levels.
Iron ore prices have more than halved in the past year as surging production swamped cooling demand, although the key iron ore index rebounded slightly yesterday to end a six-day losing streak.
Mr Goncalves said the price of seaborne iron ore shipped by Australian miners could halve again from about $US60 a tonne to as low as $US30 as a result of the major miners’ expansion strategy. “You call that strategy? I call it self-destruction,” Mr Goncalves said.
On Tuesday, Rio Tinto iron ore chief Andrew Harding and his BHP counterpart, Jimmy Wilson, defended their companies’ roles in the creation of the supply glut, arguing that each tonne of supply they did not deliver would have been filled with lesser-quality ore from elsewhere.
But Mr Goncalves said the actions of the majors would have serious ramifications for Australia. “We are going to have Australia going out of business as a country,” he said.
West Australian Premier Colin Barnett had complained about the falling price of iron ore when it fell towards $US80 a tonne, he noted.
“At $US58, he should be starting to climb the walls. If iron ore continues to deteriorate, the history of Australia as a country will be changed. We need to think about these consequences.”
The apparent effort among Australian miners to drive Chinese producers out of business — aided by the recent Reserve Bank interest rate cut and subsequent falls in the dollar — could catch the eye of the WTO.
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