Andrew Forrest’s war on iron ore competitors has just kicked up a gear

Founder and chairman of FMG Andrew Forrest has called on the public to write to their local MPs and question whether Rio Tinto and BHP Billiton have a licence to operate in Australia.

The surprising attack comes after weeks of jibes from Forrest which have called into question the iron ore strategies being employed by the major miners.

Forrest is blaming Rio and BHP for a fall in the price of iron ore as the pair continue to ramp up production.

The chairman says the miners have made a deliberate play to keep prices down by flooding the market and making statements about the future increases in production.

In an editorial published in the Daily Telegraph today, Forrest claims the public are being “gamed” and has urged Australians to “stand up” and have a go at the miners.

“Write, email or ring your local MP. Be clear in your views. Ask the government to consider the multinationals’ licence to operate in Australia if they don’t market Australian iron ore responsibly for all Australians,” Forrest said.

Forrest warns government funding for everything from education to superannuation is being put at risk and said tomorrow’s budget would be $18 billion worse off on the back of low iron ore prices.

As part of the call-to-arms message, Forrest revealed his own company Fortescue Metals Group had been forced to let go of 100 workers a day due to the depressed iron ore market.

“As the person who founded the company it is heartbreaking, and yet my pain is nothing compared to the suffering of all those people now suddenly in unemployment queues,” Forrest said.

“However what is really galling is that the price has fallen off a cliff not just because of international forces beyond our control but because of the words and actions of companies, particularly London-based multinationals, who mine and export our iron ore.

“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.”

Forrest cited comments from BHP Billiton Iron Ore CEO Jimmy Wilson that “we’re oversupplying at the moment and we’ll oversupply in the medium term” and Rio Tinto CEO Sam Walsh declaring “a lot of my friendly competitors are going to disappear”.

“These big companies say they must flood the market next year and the year after and the year after even though it will crash the price further. Every time they say this, the price falls again.,” Forrest argued.

“And the losers in this game are you: Your jobs, your superannuation savings, the strength of your share market, and your governments’ ability to invest in schools, hospitals and better roads.

“Australia can be either helped or harmed by decisions made in the boardrooms of the world’s biggest miners. And right now, Australia is being harmed.

The Minerals Council of Australia says Forrest is playing a “dangerous game” pushing for the Federal Government to direct his competitors on how to run their mining businesses.

“There is no role for government in ‘managing’ the iron ore market,” the council’s CEO Brendan Pearson said.

“A government direction to reduce Australian output would have a damaging impact on the iron ore sector and on Australia’s reputation as a reliable supplier and as a secure investment destination.”

Pearson said Forrest’s view that Australia can effectively set the iron ore price is “simply wrong”.

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