Iron ore wars get personal as Rio tells Fortescue to get its house in order – by Michael Smith (Australian Financial Review – April 30, 2015)

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Fortescue Metals founder Andrew Forrest has not been shy about telling Rio Tinto and BHP Billiton how to run their iron ore operations. Rio Tinto’s iron ore boss Andrew Harding is now offering Forrest some advice of his own: get your own house in order and leave us alone.

“The response to that is to fix your own business – not give business advice to others, and definitely not create an environment in Australia where this long-term strategy, which is good for the country, and good for the company, is cast into question,” Harding said in an interview with The Australian Financial Review.

The comments highlight the growing tension between the nation’s three big iron ore producers as the debate about how to manage supply and demand in a low-price environment spills over into the political arena.

It is not the first time Harding has defended the strategy to run the company’s mines at full capacity. But the campaign on both sides is intensifying and becoming more personal.

Harding has made it clear Rio Tinto is not going to blink. He doesn’t believe BHP Billiton has either, despite some contrary interpretations of last week’s decision to defer infrastructure spending at Port Hedland.

Rio Tinto, which is targeting production costs of $US15-a-tonne, is not backing down from its targeted 350 million tonnes output target by 2017 despite a 50 per cent fall in iron ore prices over the last 12 months.

PUBLIC COMMENTARY

Both Rio Tinto and Fortescue are claiming the other is threatening Australia’s national interests with their public commentary around iron ore.

Harding suggests Fortescue is acting out of self-interest because it got into the market too late and is frustrated its higher cost of production makes life difficult given the slide in commodity prices.

“I can understand, if you are not a low-cost producer, and you have made your investment at an irrationally high time in the marketplace, well above the average price for the past many decades, that you would be troubled by current circumstances, but that is your responsibility, your business decision.”

For the rest of this article, click here: http://www.afr.com/business/mining/iron-ore-wars-get-personal-as-rio-tells-fortescue-to-get-its-house-in-order-20150430-1mx115

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