SYDNEY—The Australian government said Thursday it will
not seek to hold a special parliamentary inquiry into recent
activity in the iron-ore market.
"After discussing the issue with regulatory bodies and
stakeholders across the resources sector, the Government will not
be initiating an inquiry at this time," Treasurer Joe Hockey said
in a statement.
The decision represents a turnaround for the conservative
government after Prime Minister Tony Abbott l ast week backed a
special inquiry, saying it was important to discover the facts
underpinning sharp falls in prices for the country's chief
export.
Independent Senator Nick Xenophon has been calling for
parliament's economics committee to investigate claims that mining
giants BHP Billiton and Rio Tinto are driving down prices by
boosting supply to undermine smaller competitors.
BHP declined to comment. Spokesmen for Rio Tinto and Fortescue
couldn't immediately be reached.
Earlier this week, BHP chief executive Andrew Mackenzie
cautioned a parliamentary review would send "a terrible signal" to
iron-ore buyers in countries including China and Japan, and could
encourage them to invest more in other resource-rich countries such
as Brazil to diversify their sources of supply.
The Minerals Council of Australia, a lobby group for the mining
industry, also said last week 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.
The iron ore price has collapsed to decade lows in the past year
as swelling supply from mines in Australia's Pilbara region has met
cooling demand from China's steelmakers.
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.
The price falls have become so pronounced that they are eating
into tax revenue, making it harder for the government to improve
the nation's finances as promised at the last election, while
producers with high cost bases are now threatened.
Opposition leader Bill Shorten said the uncertainty around an
inquiry had damaged investor confidence in Australia.
"There is no doubt the Prime Minister's actions and those of his
Ministers have damaged the industry. This has been a debacle
entirely of the Government's own making," Mr. Shorten said in a
statement.
Write to James Glynn at james.glynn@wsj.com
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