SYDNEY, May 21 (Reuters) - The Australian government will not back an inquiry into the drivers behind the iron ore price slump, the country’s treasurer said on Thursday, a decision that will please top producers Rio Tinto BHP Billiton .
Australian Prime Minister Tony Abbott last week threw his support behind a proposal by Senator Nick Xenophon for an inquiry into the impact of the price collapse on government revenue and to consider whether action was needed to ensure healthy competition in the sector.
But Australian Treasurer Joe Hockey said the government would now not back any inquiry.
“After discussing the issue with regulatory bodies and stakeholders across the resources sector, the government will not be initiating an inquiry at this time,” Hockey said.
An inquiry would have centred on allegations that Australia’s largest miners had colluded to depress prices and drive smaller producers out of the market, suggestions denied by both Rio Tinto and BHP Billiton.
BHP Billiton chief executive officer Andrew Mackenzie went on the offensive earlier this week, calling the idea of an inquiry a “ridiculous waste of taxpayers’ money.”
The iron ore price slump has caused a A$20 billion ($15.79 billion) loss in government revenue in the past year. The fiscal 2016 budget released last week hinges on iron ore fetching at least $48 a tonne over the next year.
Iron ore hit a decade-low of $46.70 a tonne .IO62-CNI=SI in April, but has recovered some lost ground since to stand near $58 on Wednesday.
The price of the steelmaking raw material is still 57 percent down from last year’s peak, pressured by a global glut as top miners including Rio and BHP as well as Brazil’s Vale boosted output as demand growth in top buyer China cooled.
$1 = 1.2669 Australian dollars Reporting by Colin Packham