Rio Tinto’s Walsh Slams Rival’s Call for Iron Ore Cartel

Rio Tinto Group, the world’s second-largest iron ore exporter, labeled a rival’s call for the biggest producers to cap output as nonsense.

Rio Chief Executive Officer Sam Walsh said that Fortescue Metals Group Ltd. Chairman Andrew Forrest’s call Tuesday for major competitors to limit output to boost prices was a “hare-brained scheme.”

“The comments were absolute nonsense,” Walsh said Thursday in Melbourne. “It won’t help us in the longer term to prop up projects that are actually not competitive.”

Iron ore has slumped 51 percent in the past year and touched the lowest since at least May 2009 as the largest producers including Rio and Fortescue boost supply. Forrest’s call prompted the Australian Competition and Consumer Commission Wednesday to seek an explanation.

“I’m not sure that the Chinese customers of Andrew actually appreciate the comments,” Walsh said, answering questions at a tax conference.

Any attempt by Australian businesses to encourage competitors to restrict output is a matter of “grave” concern, the regulator said in a statement.

Forrest’s comments were “intended to draw attention to the fact that there is provision in Australia’s competition law dealing with the potential for discussions to be held by exporters,” Fortescue Chief Executive Officer Nev Power said Wednesday in a statement.

The law includes an exemption in some limited circumstances in relation to goods exported from Australia, the competition commission said.

Before it's here, it's on the Bloomberg Terminal.