Labor floats ore royalties probe

The State Opposition says it will call for a Parliamentary inquiry into WA’s iron ore industry, focusing on whether the State is getting the best royalty returns from the big Pilbara producers.

Shadow Minister for State Development Bill Johnston said yesterday the inquiry would be set up in response to months of criticism of BHP Billiton and Rio Tinto from Premier Colin Barnett and Fortescue Metals Group chairman Andrew Forrest over who was responsible for falling iron ore prices.

The inquiry would examine the industry, including the role the expansion of WA’s Pilbara iron ore operations has played in the iron ore price crash.

Mr Johnston said it would also examine whether setting up Singapore marketing hubs had enabled some producers to reduce their State royalty obligations.

“The Labor party supports the free market, but we want to have an opportunity to make sure there is actually is a free market, and whether the price returned to Western Australia is the best that can be achieved,” he said.

“We don’t want to investigate any particular company, we want to investigate all of the issues of the iron ore sector. But if that’s an issue then that is something that would have to be investigated,” Mr Johnston said.

The inquiry would likely be conducted Parliament’s Economics and Industry Standing Committee, or its powerful Public Accounts Committee, he said, and would attempt to cut through some of the public brawling between Mr Barnett, Mr Forrest and Rio and BHP.

Mr Johnston said the Premier had spent the past two years cutting ribbons at WA’s iron ore expansion projects, before turning on Pilbara’s big producers over falling prices and the impact on WA’s royalty revenue.

“We’d like to have a complete examination so there’s a proper opportunity to look at the facts,” he said.

BHP and Rio have flagged moves to pull back spending at their mining operations because of softer commodity prices.

Speaking at a Spanish conference, BHP’s Andrew Mackenzie said it had cut $US1.8 billion from next year’s spending plans. Rio Tinto chief Sam Walsh told investors not to expect further capital investment in the Pilbara after the company completes its infrastructure build-out.