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Iron ore to be sold in a free market environment.



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15 March 2006

IRON ORE TO BE SOLD IN A FREE MARKET ENVIRONMENT

Australian Resources Minister, Ian Macfarlane, this morning addressed the issue of price caps on the Australian export of iron ore to China. Speaking at a national safety conference being held by the Australian Petroleum and Petroleum Exploration Association in Perth, he said:

“Australia has welcomed investment from all over the world including from China and we’ve welcomed it on the basis of a free market and without condition relating to country or resource.”

“Our government would be very alarmed if price caps were introduced into what should be a free market operation with China.

“China would obviously be expected to behave in the same way as every other free market and normal commercial negotiations would take place.

“There’s obviously some speculation going on at the moment, and I think that relates more to the re-negotiation (on contracts) but can I just say there is no place for price caps in a commercial market.

“There’s a fair amount of commentary but can I say Australia’s supply of iron ore and any other commodity into the Chinese market is based on commercial arrangements.

“Australia has the opportunity to continue to supply China with iron ore cheaper than it can buy from most other places.

“So it would be in China’s best interests that it continued a commercially negotiated arrangement with Australian exporters on the basis that it then allowed companies like BHP and Rio to make the investments to supply the growing demand for iron ore in China.”

Mr Macfarlane also noted that he was looking forward to welcoming Chinese Premier Wen to Australia early next month and providing him with a briefing detailing the diversity and strength of Australia’s resource sector.