Western Australia’s smaller iron ore miners could go out of business if the price of the commodity remains weak, Premier Colin Barnett has warned.
Despite the iron ore price rebounding slightly to $US84 per tonne this week, Mr Barnett says thousands of mining jobs could be lost if prices continue to be subdued.
The steel-making ingredient has recently been trading around five-year lows of $US80 per tonne, meaning companies such as Atlas Iron, Arrium, Gindalbie, Grange Resources, BC Iron and Mount Gibson are unlikely to meet their break-even costs.
Mr Barnett said he was concerned about the status of smaller iron ore producers and the protection of jobs.
“If the price of iron ore stays at its low level or falls further there will be West Australian mining companies that will no doubt go into loss situations and they will, in the worst case scenario, be forced to close with the loss of thousands of West Australian jobs,” Mr Barnett told parliament on Wednesday.
Mr Barnett’s comments came as he sought to downplay a previous verbal attack on iron ore mining giants BHP Billiton and Rio Tinto, claiming he never suggested the two mining giants were colluding to push out smaller miners as they ramp up production amid weaker demand.
“The companies are not behaving, as some have suggested, in a collusive way,” he said.
“But they are employing a very similar policy, probably for their own reasons but maybe the same reasons, which I think is damaging to the West Australian economy, to the iron ore industry, to the small iron ore producers and the people they employ.”
Rio chief executive Sam Walsh said he did not know where Mr Barnett was coming from as the government had approved its Pilbara expansion plans.
Between May 2012 and the end of June 2013, the Australian mining sector shed 26,000 jobs.
The iron ore price has plunged almost 40 per cent this year.