PERTH (miningweekly.com) – Australian Industry and Science Minister Ian Macfarlane on Tuesday insisted that the government had no intention of regulating the iron-ore market, as BHP Billiton CEO Andrew Mackenzie warned that an inquiry into the sector would send a “terrible signal” to Australia’s trading partners.

In an interview with ABC Radio, Mackenzie said that government intervention in iron-ore prices would be an “amazing gift to our competitors in Brazil”, and warned that it could cause Australian trading partners to invest in other parts of the world.

“I believe that free trade is absolutely critical for the future of Australia and its place in the world. Its good for the world economy and its good for geopolitical harmony when people feel that they can count on Australia for the supply they need to grow.”

Mackenzie called a possible inquiry into the iron-ore sector a “ridiculous waste of taxpayer money”.

“It's red tape, pure and simple.”

However, Macfarlane was quick to point out that no decision had been taken on whether the inquiry would proceed.

“Let's be clear – no decision has been made to have an inquiry and no-one in the government wants to regulate the iron-ore market. There have been claims and counter claims and that's what the Australian Competition and Consumer Commission is there for. They can look at those claims and we'll continue to monitor the situation.”

Prime Minister Tony Abbott had previously said that he was in favour of a Senate inquiry; however, that an inquiry should not be allowed to turn into a witch hunt.

“If we are going to have an inquiry it has got to be a fair inquiry; it can’t be a witch hunt, it can’t be directed against any particular company or companies – it has got to be fair and square and reasonable,” the Prime Minister said earlier this week.

The idea of a Senate inquiry has also received the full backing of mining magnate Andrew Forrest, who has been very vocal in his disdain of majors BHP Billiton and Rio Tinto’s plans to increase their Pilbara capacity despite the fall in iron-ore prices.

Forrest has blamed the two majors for flooding the market, and, in turn, forcing down the iron-ore price, making it more difficult for smaller, higher-cost producers to operate.

Forrest has even gone so far as to call on the Australian government to remove both Rio Tinto’s and BHP Billiton’s licence to operate.

“I believe it is in the national interest to fully investigate why certain industry players repeatedly made forward looking statements about oversupplying the market and how those statements contributed to the collapse in the price of iron-ore,” Forrest said on Tuesday.

He added that any inquiry would help determine whether the iron-ore market was operating as a truly free market, or whether it was being distorted by the actions of certain industry members, and to whose benefit and why.

Forrest said that contrary to misleading statements in recent days, he had not called for government intervention.

“I have not called for new regulations. Nor have I called for any other structures, [something] which has been falsely attributed to me. I have supported the idea of an independent investigation into the causes of the price crash and how the price crash impacts Australia’s national interests.

“In recent days there has been an attempt to paint my position as one of being an interventionist. There have also been scare comments about an inquiry damaging Australia’s reputation as a great place to invest and a trading partner,” Forrest said, adding that in his own view the scare tactics were entirely without merit.

The Minerals Council of Australia (MCA) has welcomed a Senate inquiry, stating that although it might not be the most effective use of Parliamentary resources, it would shine a critical light on a number of claims made by Forrest.

“It will also expose the folly of calls from Forrest for the Australian government to remove his competitors’ ‘licence to operate’, to re-regulate commodity markets and to establish illegal cartel arrangements,” MCA CEO Brendan Pearson said earlier this week.

“A focus on facts rather than rhetoric will enable a rational consideration of the importance of free and open markets and the dangers of interventions in favour of selected producers.”