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ANGE:

From Schwartz Media. I’m Ange McCormack. This is 7am.

As the founder of one of the world’s biggest mining companies, Andrew ‘Twiggy’ Forrest has done more to advance global warming than some small countries.

But, recently, Twiggy has become an advocate for climate action, and is betting the future of his empire on a green transition.

His approach has spooked investors and executives alike, with a string of resignations and turmoil in the company’s ranks.

Today, contributor to the Saturday Paper, Marc Moncrief, on the chaos at Fortescue, and whether Twiggy really is a climate messiah.

It’s Wednesday, September 13.

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ANGE:

So Marc, Australia's richest man, Twiggy Forrest, has had a pretty crazy last month or so. Can you tell me a bit about what's been going on?

MARC:

Yeah Ange, it's been pretty wild at this company, Fortescue Metals Group. Andrew Forrest, who is the founder and the chairman of that company, everybody calls him Twiggy, it's been his nickname for a long time, and that company is celebrating, now, 20 years since they started mining iron ore in the Pilbara.

And this is the company that's made him Australia's richest man. I think Bloomberg had him at about $20 billion pretty recently, but of course, his numbers go up and down with the price of iron ore.

And of course, he had this huge party to celebrate in the dirt of the Pilbara.

He entered, apparently, the party on this massive mining truck. Waving flags and being very festive.

He's there with all these employees and influential people, and Jimmy Barnes is there performing his hits and.

Audio excerpt – [Jimmy Barnes performing live]

But in the background, while this party is going on, the company's CEO, Fiona Hick, is resigning from the company, and she's only been there for six months.

Audio excerpt – Reporter:

“The resignation of its chief executive Fiona Hick, that’s just 6 months after she joined the iron ore miner.”

MARC:

And so that news comes through, and a couple of days later her chief financial officer, she leaves too.

Audio excerpt – Reporter:

“Christine Morris, we barely knew ye, after 3 months in the job now the CFO has gone”

MARC:

And then we find out that it's not just the CEO and the CFO who are leaving, but also a member of the board of directors of this very important subsidiary called Fortescue Future Industries, this director’s name is Guy Debelle, he's taken off as well.

Audio excerpt – Reporter:

“Guy Debelle, this morning, severed all ties with the Fortescue group of companies…”

MARC:

So he's got a lot of churn going on at this company in a very short period of time.

ANGE:

Yeah. And that churn, and all of those resignations, and that turmoil at the same time is pretty unusual. Why are people around him suddenly leaving the company and losing faith?

MARC:

I think it's fair to say that Fortescue is a company that is in transition. Traditionally Fortescue's been a pretty easy company to understand. Basically, they mine iron ore and they sell that ore, mostly to China. You know, this has been the story of the Australian economy over the past 20 years or something.

But times are changing. China is growing at 20 plus percent a year anymore. So, you know, if you're a mature company, you've got to do more than just one thing, and Twiggy has decided in his role as chairman and founder, and kind of a spiritual leader of this company, that the next big thing Fortescue needs to do is move hard into clean energy.

Audio excerpt – Andrew ‘Twiggy’ Forrest:

“My Company, Fortescue Future Industries, and myself, my family, everyone I know really believe that Australia is on the cusp of becoming a renewable energy superpower…”

MARC:

So as part of that, he's become a very loud, very public advocate for action on climate change, and he's throwing money at clean energy projects, even though he's openly admitting that these aren't going to give them the kind of returns that they're used to from the iron business.

So on the one hand, you know, he's got this big emitting iron operation, and on the other hand, he's trying to build an empire in clean energy. So, to make these two worlds align, he's got to pull hard on the iron operations to get cleaner, and he's got to diversify the company into what he sees as an emerging energy market.

Now, by Twiggy’s account, Fiona Hick wasn't on board with the way that transition was going. He said that the only reason anyone would leave the company is because they're not on board with this big transition.

The thing is, both Hick and Morris were hired after the company's new vision and strategies were in place. So maybe the issue was less about where they're going and more about how to get there.

ANGE:

Right, so the company actually started making this transition or pivot to green energy a few years ago. And meanwhile, the company's been making lots of money, still very profitable business. Why is it now in the past couple of months that everything seems to have been in a lot of turmoil and there's been this big turnover?

MARC:

Okay, so as a bit of background, Australia has pretty serious legal framework about making sure companies disclose information to their shareholders. And one of the main ways they do that is by posting statements to the ASX when they're likely to be important to shareholders. So as the market is digesting Hick's departure, and what that's going to mean for the future of the company, Fortescue posted a presentation that Twiggy had given to the Boao Forum for Asia.

Audio excerpt – Andrew “Twiggy” Forrest:

“The presentation you are about to see may explain a lot. Particularly to my Fortescue family. There’s been changes, and there’s been a steely discipline about our future.”

Now, the subject of this presentation was lethal humidity, which is when heat and humidity combine to make the human body's self cooling system fail. Your sweat doesn't evaporate so it can't cool you down. In Twiggy’s words “you cook”.

Audio excerpt – Andrew “Twiggy” Forrest:

“But if it's too humid, your sweat can't evaporate, Your body heat can't escape. As you sit here, your body is churning through energy, creating heat, right now. If you can't exhaust that heat, you're going to cook pretty quickly.”

MARC:

Now it's worth saying that lethal humidity is a real thing, the problem was that the presentation came across as so apocalyptic. Here was Twiggy, he’s telling in this room about this thing, most of them had never heard of it, and saying it's going to be the next pandemic, but that this time there's not going to be any cure, and millions of people are at risk of sudden death.

ANGE:

Very alarming.

MARC:

Yeah, very alarming. And, you know, if you watch the video of the presentation, he kind of pauses a couple of times to look at the audience and say, you know, he's not kidding about any of this and that all of this content is, you know, properly referenced science.

Audio excerpt – Andrew “Twiggy” Forrest:

“At just 35 degrees Celsius with high humidity, death within 6 hours, deaths have been recorded within 15 minutes. Just as a scientist, we have got to be as safe as possible.”

MARC:

And he might be right. But, it just left investors confused. How are they supposed to use this information to value their shares, basically.

And, you know, a couple of days after this presentation came out, Peter White, who was a prominent investor in Fortescue, was in the Financial Review saying he'd sold about 75% of his holding and that now Forrest had to, in his words, “get the hell out of the day to day operations of the company end.”

So I've been out there speaking to people, you know, investors and analysts in this company, and very few of them want to go on the record. But there are certainly people out there who are concerned about Twiggy. One investor who I spoke to who has watched this company for a very long time. You know, he asked not to be named, but he said that this new direction with Forrest on, has this kind of messianic quality to it. And, you know, to the extent that it just doesn't seem like it doesn't seem rational anymore. The quote he gave me was, he said, “I reckon he's lost it. You know, he genuinely thinks he's the chosen one.”, and that's worrying for people.

But Ange, this isn't the first time Twiggy Forrest has been doubted. His reputation has been built on facing doubters and proving them wrong.

ANGE:

So, can an iron ore tycoon really save the planet? That’s coming up, after the break.

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ANGE:

Marc we know where Twiggy is now: richest man in Australia, the mining magnate who is now going all in on green energy. But where did Twiggy's story as a businessman start, and what can it tell us about his success?

MARC:

Well, you know, one of the things that makes Twiggy different in the mining business is that he is really of the place that he's out there exploiting. And when I say exploiting, I don't just mean, you know, in that negative sense. I mean, you know, taking advantage of, you know. He spent a fair bit of his childhood up there in the Pilbara. He is Western Australian, to the core. Minderoo Station is this, you know, this cattle station in the Pilbara, and he kind of grew up there. You know, he did some of his primary schooling in Onslow, which is this tiny town, you know, not much more than, you know, some caravan parks and a salt mine up there.

And now here he is, Australia's richest man. So he’s quite a story. There’s just no question.

Now, Fortescue, he started up in 2003 and he bought this lease about 700 kilometres east of where he grew up. That lease contains a place called Cloudbreak Mine. Okay. This is land that was passed over by the big miners, by the BHPs and Rio Tintos when they first went around looking, scouring the Pilbara for places they were going to mine iron. And part of the reason for that is just because of the shape of the deposit. Mining companies, if they can have their chosen spot, they'll dig straight down in a mine because if they've got a deposit of iron that goes downward they don't have to remove a lot of the dirt that’s up the top of the resource before they can start digging into it. But Cloudbreak is not built that way. It's kind of spread out. It's this you know, I've seen it described as a kind of a checkerboard pattern. And so you can imagine figuring out how to make a mine like that successful, it requires some outside the box thinking, it requires some innovation. And Twiggy really made himself renowned by bringing that kind of innovation into an industry that was really dominated by a couple of players.

So he's, you know, proven himself to be innovative and clever in ways that makes him sort of stand out against his peers.

ANGE:

And what does that sense of innovation and determination say about Twiggy and how he operates, and how he might pursue this green vision?

MARC:

Well, you know, Twiggy Forrest is not a man who does things by halves. And he's not a guy who likes to kind of sit around waiting to see what the other guy's going to do. You can bet his moves in this space are going to be going to be aggressive, and they're probably not all going to work. But, the point is, he's gone all in on this green power. And this is a person we have to remember who has built his wealth through a company that emits more greenhouse gas each year than the country of Bhutan. So, that's his company and he's still the chair of that company. So maybe it won't be smooth. But he certainly doesn't seem to be showing any signs at this point that his appetite is diminishing. He seems just as hungry as ever. And the thing is that he has this knack of getting things over the line, not only having crazy bold vision, but actually executing it.

ANGE:

And I guess I'm wondering why Twiggy is pursuing this green vision more broadly. You know, is it his mining magnate guilt of, you know, emitting as much or more emissions as Bhutan and wanting to repent for those environmental sins? Or is it actually just about making money because he's a businessman?

MARC:

Well, I've heard a few different stories about this. And he did tell The Washington Post that it started after he had and what it sounds like a near-death experience hiking. He fell down the side of a cliff and shattered his leg, had to apparently, sort of, pry it out of a rock and has said that he very easily could have died at this moment. And while he was recovering, he picked up a doctorate in ocean studies. And so this convinced him that we weren't doing nearly enough to stop greenhouse gases. But there's no question he sees the opportunity in this.

Fortescue Metals is all about iron ore and it's all about the Pilbara, but these green energy projects are taking him all over the world. He's out there making deals. He's looking for partnerships. So this new focus on green hydrogen and lethal humidity, it might sound like a lark for an iron ore billionaire, but it could also be just another example of forest seeing further than his peers, you know. According to the CSIRO, the market for the fuel throughout Asia could be worth nine and a half billion dollars by 2030.

One investor I spoke to said to me, “he's not doing this green stuff to make the world better. Everything he does is about making himself richer.“

But I guess I would say that commercial success doesn't have to be to the detriment of the planet. If you want a low carbon future, if that's the world you're going for, and you hear some dirty miners say, “Yeah, we're too dirty, we're making a mess, we're going to risk a hell of a lot to try to fix it.” If they turn out to make a whole lot of money but succeed in significantly reducing carbon emissions, are we going to be mad about that? Isn't that how you convince other businesses to get on board? So the real question is whether he'll be allowed to keep going. I mean, for a lot of company chairman, the kind of disruption Fortescue has seen would be a danger, but we have to remember he still owns about a third of all Fortescue shares. So maybe the question isn't just how far will his investors stick with him, but how much will that matter, to Twiggy Forrest?

ANGE:

Marc, thanks so much for your time today.

MARC:

Thank you very much.

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ANGE:

Also in the news today…

Internal training material from the ‘No’ side of the referendum campaign reveals that volunteers are being trained to not honestly identify themselves upfront when calling households, and to focus on emotions instead of facts.

The training material, obtained by the Nine newspapers, comes from inside the leading ‘No’ activist group, Advance, which boasts a 10,000-person strong network of phone campaigners.

And…

Despite speculation over her leadership, Queensland Premier Annastacia Palaszczuk says she is “absolutely determined” to lead Labor to another election in Queensland.

Palaszczuk faced her first question time yesterday, since returning from leave, and was asked whether she could control her own MPs – after anonymous quotes appeared in the media from Labor MPs calling on her to resign.

I’m Ange McCormack, this is 7am. We’ll be back again tomorrow.

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