Treasurer Joe Hockey has rejected a suggestion by mining billionaire Andrew 'Twiggy' Forrest that the world's iron ore companies ought to band together to restrict iron ore supplies to stop global prices falling.

Mr Forrest made the suggestion on Tuesday night at a business dinner in Shanghai, saying major miners such as BHP Billiton, Rio Tinto, and Brazil's Vale – and his own Fortescue Metals – should cap their production of iron ore to prevent prices falling to unprofitable levels.

Beg to differ: Federal Treasurer Joe Hockey, left, and mining magnate Andrew Forrest.

Mr Forrest made the suggestion when arguing that smaller iron ore producers could be forced out of the market if prices stayed around $50 a tonne, and that Chinese steel mills were concerned about eventually being left with only a few players to buy iron ore from.