Beg to differ: Federal Treasurer Joe Hockey, left, and mining magnate Andrew Forrest.
Treasurer Joe Hockey has rejected a suggestion by mining billionaire Andrew 'Twiggy' Forrest that the world's iron ore companies ought to band together to restrict iron ore supplies to stop global prices falling.
We're not very supportive of cartels at all
Joe Hockey
Mr Forrest made the suggestion on Tuesday night at a business dinner in Shanghai, saying major miners such as BHP Billiton, Rio Tinto, and Brazil's Vale – and his own Fortescue Metals – should cap their production of iron ore to prevent prices falling to unprofitable levels.
Mr Forrest made the suggestion when arguing that smaller iron ore producers could be forced out of the market if prices stayed around $50 a tonne, and that Chinese steel mills were concerned about eventually being left with only a few players to buy iron ore from.
He said major players such as Rio Tinto and BHP Billiton should also cap their production "and we'll find the iron ore price goes straight back up to $US70, $US80, $US90".
"I'm happy to put that challenge out there, let's cap our production right here and start acting like grown-ups," Mr Forrest said.
But Treasurer Hockey rejected Mr Forrest's idea on Wednesday, telling reporters in Canberra he was not a fan of it - even though it would generate extra revenue for the government.
"We're not very supportive of cartels at all," Mr Hockey said.
"It is important that we continue to believe, as we always have as Liberals, in free markets."
The Treasurer instead suggested the best way to boost iron ore profits in a low-price era was to improve infrastructure in parts of the world, such as India, where iron ore suppliers do not have great access.
"The lack of infrastructure in India means it's hard to get those shipments over there," Mr Hockey said.
"So anything we can do to help to build port infrastructure in India with the Indian government ... is actually going to be to our great advantage.
"This is where if we contribute a bit we can get a lot, and that's certainly at the forefront of our thoughts about signing the memorandum of understanding for the Asian Investment Bank."
Mr Forrest's 'price cap' comments have earned the attention of the Australian Competition and Consumer Commission, with ACCC chairman Rod Sims warning on Wednesday he "will be looking closely at Mr Forrest's comments and the context in which they were made".
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