Ailing Fortescue begins job cuts, hits out at rivals BHP and Rio Tinto – by Andrew White and Andrew Burrell (The Australian – April 30, 2015)

http://www.theaustralian.com.au/

Andrew Forrest has accused his two larger rivals, BHP Billiton and Rio Tinto, of jeopardising the budget by driving the iron ore price lower as his Fortescue Metals Group began cutting jobs.

Mr Forrest said the price would be driven lower unless the major producers checked their planned increase in production and stopped saying they intended to continue “oversupplying’’ the market.

“If we don’t get responsibility coming into the future actions and the current statements of the very multinational companies that derive their fortunes from our own land then the iron ore price will continue to fall, the budget will be thrown into jeopardy, the deficit will grow and our standard of living will fall,’’ Mr Forrest told broadcaster Alan Jones yesterday. “And it’s all completely avoidable. None of this had to happen.’’

Mr Forrest has refused to back down on calls for the producers to agree on slowing capacity expansion, despite attention from the Australian Competition & Consumer Commission over the possibility of collusion.

He argued that major customers had been happy to pay $US110 a tonne for the red dirt a year ago but that commodity and futures markets had halved that price on signals from BHP and Rio that they would continue to “oversupply’’ the market. The plunge in the price has halved Western Australia’s revenue-based royalty from iron ore from $6.3 billion to less than the $3bn expected this year, has slashed federal budget company tax receipts and threatens to send some higher-cost producers out of business, with Atlas Iron in talks with creditors after suspending production.

Mr Barnett was reported to be seeking meetings with the miners to discuss the price collapse and their obligations under mining licences. Those licences include a clause that the miners must “ship from the company’s wharf all iron ore mined from the mineral lease and sold and use its best endeavours to obtain therefore the best price possible having regard to market conditions from time to time prevailing …”

Mr Barnett was unavailable for comment yesterday but he has previously suggested he could reject approvals for retention licences and future expansion plans put forward by BHP and Rio.

For the rest of this article, click here: http://www.theaustralian.com.au/business/mining-energy/ailing-fortescue-begins-job-cuts-hits-out-at-rivals-bhp-and-rio-tinto/story-e6frg9df-1227327314974

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