Sydney---The huge iron ore industry in Australia faces the threat of a parliamentary inquiry amid claims the world's biggest miners, including BHP Billiton and Rio Tinto, are flooding the market to wipe out smaller competitors.
The steel-making commodity is the nation's largest export with Australia accounting for 60 percent of the world's sea-borne supply, and the slumping price has hit government revenues hard.
Budget figures last week showed that Australia's forecast tax receipts will be cut by Aus$52 billion (US$41.6 billion) over the four years to 2017-18, largely driven by the plunging iron ore price.
The price weakness has been exacerbated by the world's biggest exporters of the commodity -- BHP, Rio, and Brazil's Vale -- who make up the majority of the market and have kept lifting production levels to maintain or even lift their export share despite slower growth in Chinese demand.
This has led to smaller mining companies, which have higher production costs, battling to survive the challenging conditions.
Andrew Forrest, chief executive of Fortescue Metals, another major Australian iron ore producer, is spearheading the charge for an inquiry, alleging BHP and Rio have deliberately flooded the market to cut prices and drive competitors out of business.
His own company has been forced to lay off hundreds of workers.
"Now I believe in free markets, but when CEOs pursue business strategies which flood the market, in a last man standing race to the bottom, we don't have free markets," he wrote this month in an column for Sydney's Daily Telegraph.
Rio's iron ore chief executive Andrew Harding on Sunday said the claim was "completely false". BHP has voiced similar sentiments but the government has indicated an inquiry could be warranted.
Independent senator Nick Xenophon has been pressing for a probe, arguing that "the minerals of this country are owned by the people of Australia and there are huge public policy interests at stake".
"There are many factors at play. There are many allegations swirling around. We haven't made any final decision in this regard," said Treasurer Joe Hockey of an inquiry.
"I have spoken to all the players here and overseas and we will be making a final decision about whether we would proceed with something that is sensible and made up of sensible people over the next few weeks."
AFP
