Lourenco Goncalves, president of a U.S.-based mining company Cliffs Natural Resources Inc., has warned that Australia could face an anti-competition probe in the future for the way it had manipulated the prices of steel-making ingredient iron ore in the world market.

He claimed Rio Tinto and BHP Billiton were on a campaign to drench China with tens of millions of tonnes of its Australian ore in a bid to discourage local competitors. Goncalves further claimed in the industry conference that the two mining giants were being aided by the Reserve Bank of Australia, saying the latter worked on the local currency to help the companies.

Since September 2014, the Australian dollar has shed 17 percent of its value against USD. Prices of benchmark iron ore for immediate delivery in China was last trading at USD 57.70 a tonne, down 1.4 per cent.

Goncalves said the market was made to believe that Chinese producers will go out of business should prices of iron ore continue to go down. Apparently this wasn’t the case, he stressed. Rising supply has pushed the prices of the steelmaking ingredient to drop to historic lows. But analysts forecast prices could turn around in 2015.

Rio Tinto and BHP along with Brazil's Vale, despite the lowered prices, continued to ship to China. Goncalves said they would need to justify why they continued to increase output despite the fall. "That would be a difficult point if one day Australia has to defend that in the World Trade Organisation," he said, noting that in the past 13 months, “just by the three companies, an amount of more or less $50 billion EBITDA was destroyed."

Cliffs is Australia’s fifth biggest iron ore export business. It also owns coal and iron ore mines in North America. But the dramatic fall in ore prices has forced it to abandon the Australian iron ore business. It has placed for sale in the market its lone mine in Australia, the Koolyanobbing iron ore mine. The company said the mine has enough iron ore good for next four to five years.

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