(Minews) - Cliffs Natural Resources chief executive Lourenco Goncalves accused Australia of manipulation on Tuesday. According to the American miner, Australia is manipulating its currency.
Goncalves referred to the richest person in Australia, Gina Rinehart, as “Gina whatever” whom Australia is allegedly “helping.” According to the U.S. miner, Australia is also helping iron ore miner Fortescue Metals Group as well as mining giants BHP Billiton and Rio Tinto with the manipulation. Goncalves’ accusation came on the same day when the Reserve Bank of Australia cut the interest rate to 2.25 percent.
Goncalves said that Australia had nothing much to do except manipulate the Australian dollar. Still, lay-offs and mines shut down, he said. "The Australians are taking no prisoners with the Aussie dollar,” The Australian quotes Goncalves. His comments coincide with Cliffs’ latest results which reveal that the company’s share price has fallen almost 40 percent since Goncalves took over in February 2014.
Goncalves is known for confrontation during conference calls. His turnaround strategy for the company is by selling off unprofitable assets and cutting costs at profitable mines. However, the company has so far failed to sell assets from the company’s extensive Australian portfolio.
According to currency experts, the reason behind the fall in the Australian dollar is the U.S. dollar getting stronger. While the Federal Reserve leaves its quantitative easing, it moves towards increasing its own interest rate from zero.
Goncalves, nevertheless, said that it was a “big mistake” on Australia’s part to assume low iron ore prices to force Chinese iron ore producers out of business. He said that Australia as well as Brazil would be left "bleeding."
The Sydney Morning Herald reports that Australian iron ore miners sell their product in U.S. dollars. However, most of their costs take place in Australian dollars. The Australian iron ore mining industry gained as the Australian dollar’s rate fell in 2014. The Reserve Bank of Australia has said that it would like to see the Australian dollar go even lower.
Cliffs appears to put more focus on selling iron ore to U.S. steel producers than to Chinese steel mills. The company has said that it sold $US99 per tonne to American mills in the December quarter.
