BHP Billiton has admitted flooding iron ore market, says WA Premier Colin Barnett

WA Premier Colin Barnett is bringing WA into disrepute over his criticism of BHP Billiton and Rio Tinto, the opposition says.

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WA Premier Colin Barnett is bringing WA into disrepute over his criticism of BHP Billiton and Rio Tinto, the opposition says.

WA Labor leader Mark McGowan said Mr Barnett had deeply offended the mining giants’ bosses by accusing them of flooding the iron ore market.

He said the premier’s comments sent the wrong messages about WA.

“I do think when someone acts to bring the state into disrepute that he should consider what he says and his own position more carefully,” Mr McGowan said.

BHP chief executive Andrew Mackenzie told reporters in London on Thursday that Mr Barnett was “completely wrong” to suggest BHP and Rio were flooding the iron ore market and placing downward pressure on prices, which could potentially squeeze out smaller players.

But Mr Barnett said the mining giant had already admitted to doing so.

“BHP at least has made those comments themselves that they are flooding the market,” the premier said on Friday in Perth.

Mr Barnett also said this month that BHP and Rio were “flawed in trying to manage the world price of a commodity”.

The premier said business and economic logic suggested the “normal reaction” to a falling iron ore price would be to cut supply, not increase it.

He said BHP and Rio’s policies were “damaging to the West Australian economy, to the iron ore industry, to small iron ore producers and the people they employ”.

Mr Mackenzie said the company was behaving as a rational economic enterprise.

“We have the opportunity to substantially increase our iron ore production through productivity and getting more out of the existing infrastructure,” he said.

“In doing that we are winning huge benefits for shareholders.”

At a conference in Sydney in mid-October, Rio chief executive Sam Walsh said he did not know where Mr Barnett was coming from because the government had approved its plans.

He said the industry was cyclical and would recover because demand would continue to be very strong through the urbanisation of developing countries.

The iron ore price has plunged almost 40 per cent in 2014.

Originally published as BHP Billiton has admitted flooding iron ore market, says WA Premier Colin Barnett