Fortescue Metals Group chairman Andrew Forrest has declared that the “overproduction” of iron ore by majors BHP Billiton and Rio Tinto is ending but not without damage to the industry.
His comments come as the price of iron ore holds above $US58 a tonne, more than double its recent low. “I am not a bull on the iron ore price,” Mr Forrest told The Australian. “The vandalism of the oversupply strategies which I called out a year ago is being vindicated.”
In a wide-ranging interview on China’s Hainan Island before the opening of the Boao Forum, Mr Forrest hinted that last week’s announcement about the retirement of Rio chief executive Sam Walsh may have been because of a shift in strategy by the Rio board away from maximising production.
“You can see the ramifications now in the changing of the guards in a new era of value over market share,” Mr Forrest said. “That is a good thing but that damage will take a while to work its way through the system.”
Mr Forrest said the damage caused by a volume focus on iron ore over the past few years “didn’t have to happen”. Rio’s iron ore chief executive, Andrew Harding, last night dismissed Mr Forrest as “again inventing a narrative”.
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