PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) has criticised the Australian Workers Union’s (AWU’s) resolution demanding a Parliamentary inquiry into majors BHP Billiton and Rio Tinto’s iron-ore practices in the Pilbara.

At its conference in the Gold Coast, the AWU passed a resolution condemning the two majors, claiming that they were flooding the iron-ore market with low-cost ore, resulting in the smaller, higher-cost producers being pushed out of the sector.

The AWU reportedly said that a parliamentary enquiry was needed to investigate “cartel-like behavior”.

However, the MCA said that the resolution condemned companies that had invested tens of billions of dollars in developing Australia’s greatest export industry.

“The notion that low-cost producers in Australia should forgo export opportunities and cede valuable export dollars to international competitors makes no sense. Far from preserving jobs, it would cost jobs. It would also sacrifice government revenues from company tax and royalty payments; revenues that go to paying for hospitals, schools and other infrastructure that benefit all Australians, including AWU members,” the MCA said in a statement.

The industry body pointed out that the bulk of Australian iron-ore production was at the lower end of the global iron-ore cost curve and the increase in export production was a product of investments to take advantage of Australia’s high-quality resource base.

Rio Tinto CEO Sam Walsh has previously defended the company’s iron-ore push, saying it was in the best interest of the company’s shareholders.

“I don’t feel any responsibility for [the closure 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 stated that in order to balance the market, a significant portion of supply would have to be extinguished.

“You can’t take off three-million or five-million tonnes and expect the prices to go through the roof. You have to take off sizeable chunks, and guess what happens when you take off 100-million tonnes; the price goes up and all those people who went out of the market would rush back in. The price will go back to where it was, and Rio’s production will be down by 100-million tonnes. That is not in the best interest of shareholders.

“So whether you like it or not, there is no OPEC in iron-ore. It is independent producers making independent decisions,” Walsh said, referring to the OPEC oil cartel that manages the supply of oil in an effort to set the price.

Australia’s export earnings from iron-ore were A$75-billion in 2013/14, up from A$57-billion in 2012/13. That increase of A$18-billion alone was more than the combined exports of wheat, beef, cotton and wool last financial year.