BHP Won’t Take Blame for Plummeting Iron Prices

Mining Australia reported that BHP Billiton (ASX:BHP,LSE:BLT,NYSE:BHP) isn’t taking the blame for falling iron ore prices, despite accusations that the company is increasing production to flood the market. Andrew Mackenzie, CEO of BHP Billiton, told Mining Australia that reducing iron production would only harm the Australian economy and that supply from a reliable miner like BHP created strong economic growth. The company has reportedly spent approximately $32 billion in the past ten years and has more than doubled production out of Pilbara, Western Australia. Considering that the iron price dropped nearly 50 percent last year, seeing top producers increase production numbers didn’t sit well with West Australian Premier Colin Barnett.

As quoted in the market news, Barnett commented:

This seeming strategy of the two major producers to flood the market (with supply) and force the price down, I mean, remember who your landlord is – that’s hurting Western Australia. I will just make the point, you can have your corporate strategy, but there’s also a sense of corporate social responsibility.

Nev Power, CEO of Fortescue Metals Group (ASX:FMG), also voiced his concerns, stating that the sliding iron ore price is being largely affected by the industry giants, as both BHP and Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) continue to expand their operations in Australia. Still, Mackenzie remains unapologetic.

As quoted in the market news, Mackenzie reportedly told the Australian:

I strongly believe that the world will be best served by a sustainable supply of commodities at a fair price, and that capital ­resources should be directed ­towards the most efficient sources of that production in a manner that the world gets them as cheaply as possible, in terms of cost, and with the greatest environmental performance and the smallest environmental footprint. The only certain effect of ­stalling production will be to ­reduce Australian exports.

Click here to read the full Mining Australia report.