The Senate’s proposed investigation into the economic impact of the collapse in iron ore prices, Australian Prime Minister Abbot’s support on Friday (May 15), has increased the pressure on major iron ore producers Rio Tinto and BHP Billiton.
If the vote initiated by independent Senator NickXenophon is passed, it may trigger a survey of the impact of a sharp drop in iron ore prices on government revenue to assess whether action is needed to ensure healthy competition in the industry. With no support from the Senate, Xenophon postponed the vote until June 16. It seems that he seems to have successfully won the support of Abbott.
In an interview with Sydney's 2GB radio station, Abbott said that it is indeed necessary to conduct an investigation. It is indeed necessary to understand what happened and has noticed the claims made by Andrew Forrest et al.
Iron ore prices hit $46.70 a tonne in April, a 10-year low, but have risen to around $61 this week. Rio Tinto and BHP Billiton supply large quantities of iron ore in the market, making it difficult for small-scale, high-cost producers to survive.
Xenophon called for an investigation into this, in line with billionaire Andrew Forrest's activities for Rio Tinto and BHP Billiton. AndrewForrest is the founder of Australia's third largest iron ore producer, Fortescue MetalsGroup. Fortescue hopes to get popular support against Rio Tinto and BHP Billiton.
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