Andrew Forrest, Lourenco Goncalves maintain rage at Rio, BHP

Andrew Forrest and Cliffs boss Lourenco Goncalves have maintained their rage against the actions of BHP and Rio.

Fortescue Metals Group founder Andrew Forrest. Picture: Marie Nirme

Time has done nothing to ease the frustrations of two of the loudest critics of BHP Billiton and Rio Tinto, with Andrew Forrest and Cliffs Natural Resources chief Lourenco Goncalves again proving their anger at the iron ore ­majors’ strategies remains strong.

Mr Goncalves, who during his time as head of US iron ore and pellet producer Cliffs has ­established himself as one of the mining industry’s most provocative voices, used his address at the Global Iron and Steel Forecast conference in Perth yesterday to accuse BHP and Rio of helping to create an iron ore oversupply.

He found a welcome audience in Fortescue Metals Group founder “Twiggy” Forrest, who gave Mr Goncalves a warm hug outside the conference before using a brief appearance in front of reporters to repeat his call for a government ­inquiry into the iron ore market.

“I think Australia needs to carefully distil comments that someone from overseas — a friend of Australia — makes about the management of the iron ore industry and supply side insensitivity (and) the aggressive attempt to eliminate competition despite the consequences to the Australian economy,” Mr Forrest said. “Let’s look at why an overseas statesman can scrape away all the corporate propaganda and say, ‘This is how it is Australia; this is what you let happen.’ It deserves an ­investigation into a supply side strategy to crush competition that did nothing but crush the Australian economy.”

A Rio spokesman said there was “absolutely no substance to these claims as we have said on many occasions previously”.

“Rio Tinto continues to operate its iron ore business in the best interests of its shareholders, delivering a massive flow-on dividend to the Australian community through taxes, royalties, jobs and economic growth,” the spokesman said.

He said the iron ore market was operating freely and openly, according to competition experts and leading economists. “Any intervention in the iron ore market would send a dangerous signal that Australia was turning away from free trade and open markets. It would roll out the red carpet for Australia’s iron ore export competitors,” he said.

“Rather than seeking government intervention to improve their competitive position, all iron ore producers would be best served focusing on maximising value for their shareholders and the communities in which they operate.”

Earlier, with Mr Forrest watching on from the audience, Mr Goncalves said the iron ore price plunge had wiped a combined $290 billion from the market capitalisation of BHP and Rio between 2014 and 2015.

“You should be really outraged by that,” Mr Goncalves said. “Australians should understand that a finite resource is being decimated and the generations to come will regret that this generation did not do a thing to stop this destruction.”

While both BHP and Rio are continuing to forecast growth in China’s steel production, Mr Goncalves said the decline in production last year would only accelerate this year. China’s steel output fell from 823 million tonnes to 804 million tonnes last year, and Cliffs expects it to drop to 770 million tonnes this year.

“Bad projections drive bad investment decisions — billions of dollars of investment deployed for no reason, just to destroy shareholder value, just to create unemployment in Australia, pollution in China, and disarray throughout the world through dumping steel.”