Iron ore pricing inquiry to go ahead, but won't 'interfere with free market', says Abbott

Tony Abbott has signalled his intention to press ahead with a parliamentary inquiry into the price of iron ore but has stressed that his government isn’t one “that interferes with free markets”.

Mining giants BHP Billiton and Rio Tinto have been accused of flooding the market with iron ore, thus lowering its price, in order to hurt smaller rivals.

Iron ore is Australia’s largest commodity export but its price per tonne has dropped dramatically from $120 just two years ago. The government’s latest budget bases its forecasts of iron ore at $48 a tonne.

Andrew Forrest, the billionaire founder and chairman of the Fortescue Metals Group, has said the drop in the iron ore price is due to “the nauseatingly repetitive statements made by these two companies that they are going to flood the market with iron ore, that they are going to be the last man standing and that their friendly competitors are going to disappear”.

Abbott told journalists in Perth on Sunday that it is “important that we get to the facts” over the drop in iron ore prices.

“There are all sorts of claim claims floating around, the important thing is that we have a dynamic, productive, creative iron ore industry for the future,” he said.

“Iron ore is incredible important commodity for this country and for the wider world, so we want to ensure that the market is operating as it should.”

The prime minister said that he doesn’t see any “heroes and villains” in the dispute and rejected the suggestion that the big miners may think the government is interfering in the free market.

“This is not a government that interferes with free markets,” he said. “The iron ore market has never been subsidised or supported by government. We aren’t in the business of holding them back, we’re not in the business of holding their hands. This government will never do that.”

The Minerals Council of Australia has ridiculed Forrest’s claims over BHP and Rio’s activities and any inquiry would highlight the “dangers of interventions in favour of selected producers”.

Rod Sims, chairman of the Australian Consumer and Competition Commission, has warned against cartel-like behaviour among iron ore producers but has said the accusations against BHP and Rio are “misguided.”

The treasurer, Joe Hockey, said no final decision on an inquiry had been made, but denied that Sims has had the final say in the matter.

“Rod Sims is an independent umpire, he has had a look at that but obviously the parliament is able to look at issues as it sees fit,” Hockey told ABC’s Insiders program.

“I don’t think you should in any way stop the parliament from looking at a range of different issues, do you?”

Hockey added that any inquiry, which will reportedly be headed by Liberal MP Angus Taylor, would not be aimed at BHP or Rio.

“They are huge taxpayers, enormous contributors to Australia and big employers and we are not anti-Australian,” Hockey said. “Remember Kevin Rudd said they were big multinationals. Frankly, they’re great Australian companies and Australian-based companies in many ways making a massive contribution to the nation.”