PERTH (miningweekly.com) – Iron-ore major Fortescue MD Nev Power has defended remarks by chairperson Andrew Forrest that major iron-ore producers in the Pilbara should put a cap on production in an effort to stop the decline of iron-ore prices.

News publication The Australian on Wednesday quoted Forrest as saying at a business dinner in Shanghai that he would be “happy” to cap Fortescue’s production at 180-million tonnes a year.

“The comments made by the chairman were highlighting the point that a last man standing fight for market share will damage shareholders of all companies, and is not in the long-term interests of our host nation Australia, or of our customers, and were intended to draw attention to the fact that there is a provision in Australia’s competition law dealing with the potential for discussions to be held by experts,” Power said on Wednesday.

“We believe shareholders will insist that they do not want to see value destroyed and ultimately, they will dictate to management that they prefer a focus on profit, rather than a focus on market share,” he added.

In a veiled hit at major Rio Tinto, Power said that statements about future production increases as part of a market-share-at-all-cost strategy were impacting sentiment that was depressing the iron-ore price when the fundamentals of the market were sound.

“A strategy of concentrating market share in the hands of fewer is not good for our customers in the long-run and Economics 101 tells us that it destroys shareholder value that can never be recovered,” Power said.

Rio CEO Sam Walsh has had no qualms in saying that the company’s continued push into iron-ore was in the best interest of shareholders.

“I don’t feel any responsibility for [the death of higher-cost producers]. I’m sad for the communities and workers affected, but people need to realise that the mining industry is cyclical, it's supply and demand and a whole raft of things. And companies need to plan accordingly, which is why our focus is on tier-one assets.”

Walsh also pointed out that a significant portion of supply would need to be extinguished in order to balance the market. However, he pointed out that the supply shortage would likely then be taken up by higher-cost producers.

Despite Power’s claims to the contrary, Rio recently revealed that Fortescue itself accounted for the lion’s share of increased production from the Pilbara.

At the recent Iron and Steel Forecast, Rio iron-ore chief Andrew Harding pointed out that Fortescue accounted for about 106-million tonnes, or 43%, of increased iron-ore output, since 2011.

Rio’s production had increased only by 63-million tonnes during this same period, accounting for 25% of the total growth in Pilbara output, while fellow major BHP had increased its output by 80-million tonnes, accounting for 32% of the increased total.