Canberra, Beijing and the iron ore pricing standoff

Joe Hockey has a story about how he once fixed the iron ore price.

At Diggers and Dealers in Kalgoorlie this month, the former treasurer recalled a meeting with China's finance minister Lou Jiwei in 2015 when the iron ore price was sliding and endangering higher-cost producers. Hockey says he threatened to merge BHP and Rio Tinto into a single seller unless Beijing backed off. Lou asked what he wanted. Never less than US$45 a tonne, Joe replied. Lou agreed, after first (we are told) taking a drag of his cigarette. The account does not record whether Joe then reached for a cigarette of his own. 

In 2026, Citizen Hockey now backs 'Team Australia', which would involve the big miners bargaining with China as a bloc. There is a nice historical wrinkle here since, in 2015, Andrew Forrest proposed that the miners cap production and "act like grown-ups". Back then, treasurer Hockey slapped that idea down because Liberals believed in free markets and were "not very supportive of cartels at all".

To be fair, Twiggy wanted coordinated production restraint, while today the challenge is a coordinated buyer, but still we've come a long way. A decade ago, the orthodoxy was that BHP, Rio and Fortescue should face the market separately. Today, it is almost as mainstream to argue they should jointly sell to deal with their buyers increasingly acting as one.