19th May 2015 10:33
LONDON (Alliance News) - Andrew Mackenzie, chief executive of BHP Billiton PLC, Tuesday said an inquiry into the Australian iron ore industry was "unnecessary", and warned it would send the wrong message to international customers about the country's commitment to free trade.
BHP shares were down 3.0% to 1,419.38 pence per share late Tuesday morning.
Speaking in an interview with ABC radio, the chief executive said BHP Billiton supported Australia?s focus on trade and competition as drivers of growth and was committed to playing a role in improving the nation?s competitiveness, noting that Australia is a "global policy leader on trade issues", he said.
The interview comes amid a political and industry-wide debate in Australia over whether BHP Billiton and fellow FTSE-100 miner Rio Tinto PLC are intentionally ramping up production to suppress the iron ore price to push out competitors, with smaller competitors claiming BHP and Rio Tinto are driving down prices by expanding production and talking about oversupply.
On its website, ABC radio said Mackenzie described the proposed inquiry as a "ridiculous waste of taxpayers' money" that would be "an additional burden on the backs of business to distract us from growing profitability and paying more taxes, red tape pure and simple."
Last week, Australian Prime Minister appeared on ABC radio and said he was in favour of holding an inquiry into the iron ore sector to ensure there was no "predator behaviour".
Mackenzie reiterated BHP Billiton's strategy was "rational, commercial and responsible with the company anticipating, and stating on many occasions, that supply growth would exceed demand growth," in a statement on Tuesday.
Mackenzie said an inquiry would be an "amazing gift" for Australia?s competitors, given iron ore is a globally-traded commodity with other major sources of supply around the world in countries such as Brazil, South Africa, India and China.
"I believe that free trade is absolutely critical for the future of Australia and its place in the world," Mackenzie said. "It's good for the world economy and it's good for geo-political harmony when people feel that they can count on Australia for the supply they need to grow."
Mackenzie added that BHP Billiton deferred around 180 million tonnes per year of growth opportunities in 2012. He claimed 110 million tonnes per year growth was deferred from the Outer Harbour Development whilst a 70 million tonne per year growth opportunity from two additional berths were deferred in the Port Hedland inner harbour, both in Western Australia.
"In line with comments by the Australian Competition and Consumer Commission, Mr Mackenzie said an inquiry would conclude the global iron ore market was operating according to market principles and no intervention was warranted," said BHP in a statement.
"I am very confident if an inquiry goes ahead that we will see this as a well-functioning market which is in the interests of both customers and suppliers," Mackenzie added.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
BHP Billiton PLC