By Rob Taylor
CANBERRA, Australia-Prime Minister Tony Abbott backed a special
parliamentary inquiry into the iron-ore market, saying it was
important to discover the facts underpinning sharp falls in prices
for the country's chief export.
Mr. Abbott didn't say whether an inquiry should take the form
proposed by Nick Xenophon. The independent senator has called for
the economics committee to investigate claims that mining giants
BHP Billiton and Rio Tinto are driving down prices by boosting
supply to undermine smaller competitors.
"What we don't want to see is predator behavior by any
companies," Mr. Abbott said in a radio interview Friday. "I'm not
in the business of demonizing any company because I'm very
conscious of the fact that Rio and BHP are Australia's biggest
corporate taxpayers. I want them to continue making a lot of
profits here in Australia."
On Thursday, Mr. Xenophon postponed a parliamentary vote on an
inquiry, saying the companies had launched a "furious" campaign to
thwart an investigation. Both BHP and Rio declined to comment on
the matter.
The Minerals Council of Australia, a lobby group for the mining
industry, said it welcomed a parliamentary inquiry to help expose
the idea that higher Australian production was chiefly responsible
for the dramatic price falls on the global market. Prices were
moving in line with market principles, the council said, adding
that government intervention was unwarranted.
Some smaller Australian producers have been among the most vocal
critics of their larger rivals' strategies. Companies like
Fortescue Metals, controlled by billionaire Andrew Forest, are more
vulnerable to lower prices because they lack the scale to keep down
production costs.
Iron-ore prices have dropped to their lowest in a decade this
year as economic growth in China, a major consumer of the
commodity, has slowed and producers have ramped up supply following
years of investment in new mines. The price falls have become so
pronounced that they are eating into tax revenue, making it harder
for Mr. Abbott's government to improve the nation's finances as
promised at the last election.
"We do need to know the facts of what's going on here, because
I'm conscious of the claims being made by Andrew Forrest and
others," said Mr. Abbott, whose remarks suggest an inquiry will
likely go ahead. "We don't want to see irrational behavior by any
businesses, particularly when predator behavior, irrational
behavior, may well have a dramatic impact on the economy."
Write to Rob Taylor at rob.taylor@wsj.com
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