As iron ore prices slip further into the abyss, Fortescue Metals Group CEO Nev Power believes the relentless expansion projects by Rio Tinto and BHP Billiton are to blame.
“The low iron ore price is not benefiting anybody,” Power said yesterday while delivering the company’s first quarter results. “It has drained an enormous amount from the economy, from the West Australian economy and the (iron ore) industry in general.”
The CEO said the continual move to add supply to an already depressed iron ore market is hindering smaller miners and creating a hole through government budgets.
“As we know in the iron ore business there has been plenty of talk about what projects will come on but they have been delayed and not come on as forecast, but this apprehension of excess supply is influencing the price,” Power said.
The accusations come as no surprise.
Fortescue’s first half profits fell 81 percent, dropping to $331 million for the six months to December. For the same period a year earlier, the miner posted $1.7 billion.
Last year, West Australian Premier Colin Barnett directly accused the two miners of “working in a concert way.”
“This seeming strategy of the two major producers to flood the market (with supply) and force the price down, I mean, remember who your landlord is that’s hurting Western Australia,” Barnett said.
"I will just make the point, you can have your corporate strategy, but there's also a sense of corporate social responsibility.
"And while you are pursuing your business strategy - which I tend to think is flawed - you are actually hurting the host State, the State that provides the iron ore and generates most of the wealth of Rio Tinto and BHP at a world scale."
The price of iron ore has fallen nearly 50 percent over the past year, settling at a five year low. The steelmaking ingredient fetches roughly $66 per ton, compared to $124 per ton a few years back.