Fortescue Metals Group says comments made by its founder Andrew Forrest in relation to working with other companies to cap iron ore production were in line with the law.
The ACCC asked FMG chairman Andrew “Twiggy” Forrest to explain calls for the world’s biggest iron ore producers to work together to put a cap on iron ore production.
Forrest challenged Rio Tinto, BHP Billiton, and Vale to put a lid on their current production increases, saying if they did “we'll find the iron ore price goes straight back up to US$70, US$80, US$90”.
"I'm happy to put that challenge out there, let's cap our production right here and start acting like grown-ups," Forrest said.
The comments come after the price of iron ore fell to $US55 a tonne last week, its lowest level since 2008.
An iron ore price of $US90 a tonne means more money for schools, hospitals, roads and universities for Australia, Forrest said.
"Why don't those companies who derive their fortunes from our nation act like grownups and just agree to cap their production?"
ACCC chairman Rob Sims said the comments and the context in which they were made needed to be investigated.
However FMG defended the remarks, stating they were made against the background of the provisions of Section 51(2)(g) of the Australian Competition and Consumer Act which deals with goods exclusively exported.
FMG CEO Nev Power said a depressed iron ore price was not in the interests of customers, shareholders of any Australian iron ore exporter, nor in the interests of the governments of Western Australia and Australia.
“Statements about future production increases as part of a market share-at-all-costs strategy are impacting sentiment that is depressing the iron ore price when the fundamentals of the market are sound,” Power said
“A strategy of concentrating market share in the hands of fewer is not good for our customers in the long run and Economics 101 tells us that it destroys shareholder value that can never be recovered.”
Power said modern economics does not support the strategy of depressing price to concentrate market share as it is too expensive to be considered rational.
“It destroys value in a similar way to predatory pricing – and is not in the long run interests of Australia or our customers,” Power said.
Low iron ore prices are taking their toll on FMG, which posted a first-half profit of $US331 million, down from the $US1.7 billion it posted a year ago.
The miner is more exposed to the iron ore price rout as it is undiversified and has higher costs than major producers.
Last week the company was forced to abandon a planned $US2.5 billion ($3.2bn) refinancing after it was unable to secure acceptable terms from both the US term loan and bond market.
The plan was aimed at securing capital to push out its debt maturity profile as the low iron ore price bites into its margins.
On Tuesday FMG’s chief executive officer Nev Power told The Australian that it may look to sell a minority stake in its Pilbara assets.