Barnett tells iron giants to stop flooding market
Colin Barnett has issued a warning to iron ore multinationals that he could stop them expanding their mines in WA if they continue to flood world markets and damage the State economy.
Speaking to _The Weekend West _, the Premier said he had "levers" he could pull to pressure the major miners to wind back planned production increases.
"They need my approval to expand output," he said. "This is our iron ore. The companies are inclined to forget that - as to who actually owns the iron ore.
"They don't legally own it until it's loaded on the ship. That's my understanding."
Mr Barnett said he did not want to punish iron ore miners but hoped they would take heed of his warnings and pull back on production to let the market get back to "some sort of equilibrium".
The Premier said that under State Mining Acts companies were required to seek the best possible price for their product.
"I don't know that they're doing that right now," Mr Barnett said.
"I'm putting out a pretty clear message to the companies.
"Publicly, internationally, in Asia, that you are producing too much.
"Demand has fallen away and it's still weak. Good business would dictate that you actually pull back on your production."
The comments put Mr Barnett on a collision course with BHP Billiton and Rio Tinto, which plan to continue ramping up supply.
Iron ore prices have crashed in the past two years on the back of a surge in supply and slowing growth in China.
The collapse in ore prices has smashed the State Budget and led to the loss of hundreds of jobs across WA.
A tonne of iron ore was yesterday worth $US49.78, well short of State Treasury's forecast for this year of $US75 a tonne.
Goldman Sachs this week forecast iron ore would slump to $US35 a tonne. If this happens, it would drain the State Budget of another $1.2 billion.
Rio Tinto used its annual meeting in London this week to make clear it would continue to expand its WA operations.
It has about 40 million tonnes of capacity spare on its Pilbara rail and port network.
Though Mr Barnett's proposal would affect BHP and Rio, it would have no impact on the world's biggest producer, Brazil-based Vale.
