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Fortescue Metals Group (ASX: FMG) founder and executive chairman, Andrew Forrest, believes that both the mining industry and the broader world are gradually embracing the concept of “real zero.”
Speaking at the company’s annual general meeting in Perth, Forrest underscored Fortescue’s ambitious goal to achieve “real zero” by 2030, rather than the 2050 net zero target adopted by most of its peers.
“Real zero means we’ll no longer use diesel; we’ll no longer use gas. Fortescue will be entirely powered by green energy, and it’s an investment that I believe is going to future proof your company, savings billions of dollars along the way,” he said.
“And I know we’ve got our naysayers – we always have – but bring them on.”
Forrest revealed that some of the company’s strongest skeptics have been its own suppliers. “These great big companies across America and Europe and Asia, just arrogantly, when we said, we need green equipment so we can deliver green for our shareholders and for our communities, they decided to shrug their shoulders and say, ‘wait until the next decade at the earliest’,” he said.
Fortescue recently announced a $2.8 billion green equipment partnership with German supplier Liebherr, which Forrest said has since sparked interest from previously dismissive suppliers.
“They missed what we believe is the largest mining equipment order in history,” he said. “They told us, ‘You won’t do it.’ They were completely dismissive. They’re not dismissive anymore.” Within hours of debuting the first green Liebherr mining truck, Forrest added, “mining executives from companies worldwide showed great interest.”
Despite a challenging year for Fortescue, which included cutting 700 jobs and scaling back some green hydrogen projects, Forrest defended the company’s strong track record of shareholder returns.
“Since 2014, we’ve made your company the highest shareholder return company in Australian stock exchange history,” he said of the $42 billion in dividends paid over the ten year period.
“Because of this sustained success, I’m confident that the new markets we’re unlocking right now, by going green, will continue this outstanding record long into the future.
“We’ve had an excellent run with iron ore. It’s really rolling. Green iron is our next big chapter, going green across the world. Much bigger opportunities again.”
Fortescue has already made strides toward its green goals. In August, the company began constructing a $50 million green metal project at Christmas Creek in Western Australia. This plant, powered by green hydrogen, will feature an electric smelting furnace producing over 1,500 tonnes of high-purity green metal annually starting next year.
“Green hydrogen is critical to decarbonizing industry – steel, shipping, aviation – all the hard to abate sectors that can’t be electrified can be released from the grip of the fossil fuel sector by green hydrogen, and that’s why it’s caused so much criticism,” Forrest said.
“And of course, it’s going to be critical for us to build a massive new green iron metal industry. This, I feel, is a once in a generation opportunity to build perhaps Australia’s largest ever single industry.”
“[Australia] ships three quarters of a billion tonnes of iron ore a year, three quarters of a trillion dollars. We’re going to double, triple that revenue.”
The results of the US election were trickling in during the meeting and Forrest was asked about the ramifications of a second Donald Trump presidency.
Forrest described Trump as a “pragmatic economic guy”.
“Remember, he’s an economic pragmatist, so he’s going to follow the money, and the money is going into green energy, just simply because it’s more competitive, so I don’t expect that to change,” he said.
Forrest also dismissed concerns over a potential US-China trade conflict and its impact on the iron ore market. “The strength and resilience of China’s economy are formidable. Regardless of the outcome, Australia’s position is secure,” he said. “China remains the United States’ largest trading partner, and both countries benefit significantly from their relationship.”
Forrest emphasized Fortescue’s bipartisan approach, noting recent meetings with both former US Secretary of State John Kerry and Trump’s former ambassador to Canada, Kelly Craft.
“We work with either side, and we’re certainly going to work with whoever the American people choose,” he said.
Fortescue faced only two shareholder questions during the AGM and all resolutions passed, despite a minor pushback of just over 11% against performance rights to be issued to Fortescue Metals CEO Dino Otranto and Fortescue Energy CEO Mark Hutchinson.
The company’s remuneration report passed with 98.9% of proxies in favour, avoiding a second “strike” for the company.
In Australia, if more than 25% of shareholders vote against a company’s remuneration report, it constitutes a strike. Two consecutive strikes triggers a board spill motion.
Forrest reiterated his commitment to the company he founded 20 years ago, pointing out that he’d recently stepped down as chairman of his charity Minderoo Foundation to spend more time on Fortescue.
“It’s really got my focus, so it’s all hands to the pump over the next couple of years,” he said.
Fortescue’s smaller rival, fellow founder-led miner Mineral Resources, has been plagued with corporate governance issues, a problem Forrest said was not present at Fortescue.
“I haven’t been paid since I started the company, and our governance is so tight,” Forrest said. “We run a very tight ship.”
