Andrew Forrest’s new Fortescue CEO on notice

It’s tough working for the billionaire man. It might get even tougher with a future China.

Fortescue Metals founder Andrew Forrest.

So far, mercurial, newly green, West Australian billionaire, Andrew ‘Twiggy’ Forrest, is only up to the ‘misfortune’ stage.

So far, he’s only ‘lost’ one CEO. But give him time, and I’m pretty sure he will eventually meet Oscar Wilde’s definition of ‘carelessness’ – to ‘lose two’. The near certainty of my prediction goes with three words in my opening sentence – mercurial and billionaire: with Forrest, it’s always been, more than with the ‘average billionaire’, my way or the highway.

And that has now been rendered even more potent by the ‘green’ highway Forrest wants to now charge down; his mad, bad and dangerous embrace of so-called ‘green hydrogen’. This has to produce (had produced?) a very bumpy and indeed wild ride for any Fortescue CEO, who ‘shares’ executive command with the controlling shareholder and ‘executive chairman’.

Although the ride has been seemingly slightly slowed by the combination of financial and technological reality.

The CEO’s ‘day job’, is of course the digging up of not quite so rich Pilbara dirt, to have it mixed with coal, mostly in CO2-belching China, to smother the globe in more and more steel. It’s tough enough being CEO of Fortescue at the best of times – trying to juggle a mercurial boss and second-rate Pilbara ore.

Former Fortescue chief executive Nev Power.

Nev Power, who was there for six utterly crucial years through the mid-2010s managed it perfectly. He really was the making of both Fortescue and Forrest, taking Fortescue from almost literally life support at one or two points, to the nation’s third iron ore heavyweight.

Elizabeth Gaines, who succeeded Power, can be better seen in hindsight as a transition CEO – largely making sure the (ore) trains kept running on time, and the billions kept coming the other way south from China.

Now former oil exec Fiona Hicks has come and gone in the flash of a mercurial billionaire’s enthusiasm.

This was captured in the way she attended and indeed could be said to have deputy-presided (to Twiggy of course) over Fortescue’s big celebration bash over the weekend. But was surgically ‘disappeared’, Soviet-style, from Monday’s profit report and presentations. What next then, for Fortescue?

Obviously, it’s all about where goeth iron ore, and especially Fortescue’s second quality product, in a world of tension between ‘Climate Change’ and eruptions of various China challenges.

Fortescue is right at the sharp end of that apex.

It’s no accident that Fortescue was celebrating its 20th year when BHP and Rio have been in the business for closer to a half-century.

The duo had and have the good stuff; and for all of the 20th century and into the 21st you needed the good stuff to make an, even just ordinary, profit; with quality iron ore dirt selling for not that much more than ordinary dirt.

Right now, in the latest June half, Fortescue was getting 88 per cent of the price paid to Rio and BHP for their ore. Steel-makers were still hungry for ore, all ore – despite some fall in price from 2022.

But are we now on the cusp of a post-China world? Defined, for simplicity say, as a ‘future China’ halving its steel-making from 1 billion a-year to, say, 500m tonnes?

Try imagining the impact.