Australia's biggest iron ore producers Rio Tinto and BHP Billiton are destroying themselves and contributing to $US50 billion in lost earnings by flooding the market, the head of US-based iron ore producer Cliffs Resources says.
Cliffs chief executive Lourenco Goncalves confirmed his company's Australian mine is up for sale as the company exits the seaborne market and said Australia could go broke if major mining companies allowed the price of iron ore, Australia's largest export, to stay low for a long time.
"You call that strategy, I call it self-destruction," Mr Goncalves told reporters at an industry conference in Perth on Wednesday.
"You pay the consequences of that.
"Let's assume that iron ore prices that are now at $US57 go to $US30, it's possible, you're going to have Australia going out of business as a country."
The price of iron ore has halved in the past year and is now trading at a six-year low of $US57 per tonne.
Mr Goncalves said Rio and BHP would have to defend their decision to increase output to their shareholders as the price of the steel-making commodity continues to fall and as the world's biggest iron ore miner Brazil's Vale ramps up production.
"During these (past) 13 months, just by these three companies, an amount of more or less $US50 billion EBITDA was destroyed," Mr Goncalves said.
The $US50 billion could have been used to buy rival Fortescue Metals Group and junior Australian iron ore miners, shut them down and keep the price of iron ore elevated, he said.
Instead, the big players' strategy to bring prices down would keep prices low for a long time.
"It's a zero sum game that nobody wins," he said.
Mr Goncalves' comments come after Rio and BHP rounded on rival Fortescue Metals Group on Tuesday as they fended off accusations of flooding the market and hurting local producers.
Cheaper iron ore would lead to cheaper steel and ultimately lead to deflation, Mr Goncalves said.
He confirmed the company's only Australian iron ore asset Koolyanobbing, which has four to five year mine life, was sharing its mining data with several parties.
He added that the 2015 start up timing of Gina Rinehart's 55 million tonne Roy Hill mine in Western Australia could not be worse given currency and price movements.
"The part I don't like is US money was used to subsidise the construction," he said.
Cliffs Natural Resources operates the former BHP Billiton Koolyanobbing iron ore operation near Southern Cross in Western Australia which it acquired from Portman Iron Ore in 2008.
