LONDON (Reuters) - The head of global mining firm Rio Tinto urged governments not to be tempted by protectionism as they try to preserve revenues at a time of weakening commodity prices.
Along with rival BHP Billiton, Rio has come under pressure in Australia, home to most of its large mines, over taxes and for flooding the market with new supplies of iron ore which have contributed to the commodity’s price fall.
The Australian economy, which relies heavily on iron ore and mining for revenue, has been hit hard by the 70 percent fall in the price of the steel ingredient from its 2011 highs.
Australian treasurer Joe Hockey said in May the price slump in the country’s highest source of foreign income had caused a A$20 billion ($16 billion) hit to government revenue in the past year.
Rio and BHP have also had to defend in the Australian Senate the use of marketing hubs in Singapore that pay almost no tax.
“In times of economic uncertainty it must sound seductive or comforting to want to put up the barriers, but we must keep markets and trade open,” Rio CEO Sam Walsh said at a mining dinner in London late on Wednesday.
“Of course a raising tide lifts all boats and when things are good public support is high, but when it changes, criticism inevitably follows,” Walsh added.
Rio is the world’s lowest-cost producer of iron ore, closely followed by BHP. Both companies have rejected responsibility for falling prices.
“It’s been suggested to me there’s a direct correlation between your position on the cost curve, and the volume of your opinion. The higher on the curve, the louder you get,” Walsh joked, referring to higher costs competitors complaining about the large miners’ strategy.
Andrew “Twiggy” Forrest for example, the founder Fortescue, a higher cost Australian producer, has accused Rio and BHP of over-producing to drive out competitors. He has called on Australia to stop Rio and BHP’s expansion plans, saying they were jeopardizing the economy.
Editing by David Evans and Mark Potter