WA Premier Colin Barnett continues attack on Rio and BHP

West Australian Premier Colin Barnett is angry at Rio Tinto and BHP and he’s not afraid to say so, this time accusing the pair of bullying junior miners.

Barnett has taken several swipes at the state’s biggest miners over the last week.

First he told them to “remember who you landlord is” while questioning their strategy of increasing iron ore supply into a sluggish market.

While on Tuesday the comments became more heated, with the premier stating the business policy being employed by the miners was flawed and accusing the miners of working “in concert”.

Barnett has since backpedalled on the last comment, and says he did not mean to insinuate that the two companies are colluding.

However, he’s still annoyed at their multi-million tonne expansion plans, blaming them for the falling iron ore price, which in turn is affecting the state budget in terms of royalty payments.

“They are employing a very similar policy, probably for their own reasons, but maybe the same reasons, which I think is damaging to the West Australian economy, to the iron ore industry, to the small iron ore producers and the people they employ,” Barnett said.

"Both companies are pushing record volumes of iron ore into the world market at a time when there is an oversupply in iron ore, lesser demand from China or a slow down in their growth and demand."

On Thursday, Barnett said the miners know too-well what their business strategy meant for other miners in the state with higher cost bases.

The Premier took umbrage with comments made by BHP Billiton iron ore president Jimmy Wilson last week when asked how his company’s expansion would affect others in the market.

"It's a tough old world out there and we have to do what we do for our own business,"  Wilson said.

"To the extent that this impacts on others, such is life."

With cash costs of around $US20 for each tonne of iron ore produced, the major miners have some wiggle room even at low sale prices.

Others in the market don’t have that luxury, and a 45 per cent fall in the price of iron ore since the start of the year has already seen two companies shut down their operations.

Barnett said he does not want to see iron ore mining in WA to revert to a duopoloy.

"By their own admission, the major companies are pushing increasing volumes on a month to month basis into the market, very conscious that is contributing to price falls in an already depressed market and very conscious by those quotes as an example of the impact this will have on smaller iron ore producers," the premier said.

"It is their decision to flood production onto the market at a time of low price. That is what is happening."

Speaking at a conference in Sydney this week, Rio Tinto boss Sam Walsh said Barnett shouldn’t complain about the company’s strategy to increase production seeing as the government signed off on the plan.

"I'm not sure where Colin is coming from in that given that we've been very clear in our plans and our expansions are approved by government," Walsh said.

Image: bullyingproject.com

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