Goncalves criticised Rio’s estimate that Chinese steel demand is going to reach 1 billion tonnes, and said it was “bending backwards” to justify its iron ore strategies.

“The irrationality is actually entrenched at Rio Tinto,” he said.

“BHP has been trying to quietly move away from their previous numbers. The 1Bt now is 935 million tonnes to 985Mt…so they cut 15Mt by 2030. But it's a baby step. But it's a step in the right direction.

“I try to see that as a more than a sign of rationale, but a sign to try to differentiate themselves against the stubborn ones that are the Rio Tinto guys.”

Goncalves noted recent data and comments from the China Iron and Steel Association and Baosteel regarding declining steel consumption.

He suggested Rio’s management was embarrassed over their assumptions that China would keep growing.

 

“But sometimes it takes some time for reality to sink in, sometimes it takes an activist, sometimes takes some people calling a spade a spade,” Goncalves said.

“But if we continue to try to deny that things are changing over there, and if we continue to say that Rio Tinto and the Australians are doing everything right, we are going to have a revolving door of Australian prime ministers in the next several years. The first one is gone actually.

“I believe that some smart people in Australia are trying to show Mr Abbott that he needed to do a real investigation to understand why prices are as low as they are, or why those – or in other words why Australia was allowing the Chinese Commodities Exchange to manipulate the iron ore prices the way they are manipulating the iron ore prices.”

Cliffs, under Goncalves’ leadership, is trying to move away from the seaborne iron ore business and a reliance on China.

“Because I believe that China is a disaster. I believe that China will bring Australia down,” he said.

“I think that Australia will only believe that China is destroying Australia when they build an artificial island on the Great Barrier Reef that they can see from the shore.”

Goncalves urged new PM Malcolm Turnbull to question why “one or two companies are giving their finite resource away to the Chinese while the Chinese builds into a military powerhouse in the South China Sea”.

“You are screwing up my country by doing what you are doing. So change your behaviour, please. So far, the word is please. Let's see what's going to happen next,” he said.

Meanwhile, Cliffs slashed its September quarter costs in Western Australia by 49% year-on-year to $US26.87 per tonne, and down from $34/t in the June quarter.

Production was 2.9 million tonnes and it lifted full year guidance to 11.5Mt from 11Mt.

“During Q3, we generated adjusted EBITDA of $10 million, while spending only $200,000 on capex,” Goncalves said.

“Continued cost reductions in this segment have been essential, and our Australian team has definitely delivered the results.

“In addition to increased efficiencies and lower mining costs, we are also benefiting from all of the headcount reductions that we executed this year.

“With all these combined efforts as well as the help of a continually weakening Aussie dollar, we have been able to keep this operation cashflow-positive.”