Fortescue’s Andrew Forrest blasts ‘cartel’ iron ore price tactics of China Mineral Resources Group

Fortescue founder and chairman Andrew Forrest says China’s state-backed iron buyer should stop using tactics aimed at negotiating lower prices for the key steel ingredient. Speaking Wednesday on Bloomberg Television from the Boao Forum for Asia in Hainan, the mining billionaire said China Mineral Resources Group was trying to “create a cartel” and cautioned it shouldn’t “poke a bear”, referring to Australia’s economy. CMRG has disrupted the global iron ore market by acting on behalf of steel mills to negotiate prices with the world’s top miners, including Fortescue and larger Australian peers Rio Tinto and BHP. Its negotiations with BHP, in particular, have soured, leading to a ban on some iron ore products from the group. “I’d say to the CMRG, step away from that gun fight, it isn’t one worth having,” Mr Forrest said. “Forming a cartel to force down the iron ore price will impact an economy completely. When you threaten someone who has nothing to lose, you can get any kind of response, and all I’m saying is the iron ore price is critical to Australia’s economy.” Mr Forrest said Beijing should instead focus on working with miners to buy more equipment from China and secure finance from mainland banks, an effort underscored earlier in the week by Fortescue’s chief executive at another major Chinese policy forum. “Go for the big dividends, which is getting the renminbi accepted as a global currency, getting trade, and getting demand for your huge manufacturing and industrial base,” Mr Forrest said. Fortescue has already secured a $14.2 billion yuan ($2.9 billion) loan from major Chinese lenders, and ordered a fleet of electric machinery from China to deploy across its mines. The company shipped over 100 million tonnes of iron ore, mainly to China, in its first half that ended in December. Bloomberg