Fortescue chief Andrew Forrest puts dark days behind him

Fortescue Metals chairman Andrew Forrest admits his company had gone through some dark days.

Andrew Forrest, chairman and founder of Fortescue Metals. Picture: Britta Campion

Fortescue Metals chairman ­Andrew Forrest admits his company had gone through some dark days, but he says he never had any doubt about its future.

With the world price of iron ore shooting up this year, from a low of about $US38 a tonne a year ago to yesterday’s $US82 a tonne, and FMG having engineered some forensic cost-cutting, Forrest, 55, is in an upbeat mood.

He has words of praise for FMG chief executive Nev Power and even some kind words to say of the senior executives at his iron ore rivals BHP Billiton and Rio Tinto after levelling a barrage of criticism at their predecessors in recent years.

“There were dark days,” Forrest told The Australian this week as he spoke about the fallout from the collapse in the iron ore price. “Incredibly tough. Plenty of companies closed down.

“But I never had any doubt about the future of the company. I always believed in the certainty of the future of FMG.

“We have gone from being a high-cost producer, with people worried about our debt levels, to the lowest-cost producer, with one of the strongest balance sheets in the resource world.”

FMG had to dig deep when the world iron ore price collapsed from a high of $US160 a tonne at the end of 2012. But over the past year, and the past few months in particular, its fortunes are turning around. It significantly improved its cost structure and has been aggressively paying down its debt. Its share price has recovered from a low of $1.45 in January to more than $6.60 this week.

FMG, Forrest declares, is “going gangbusters” under Power, who, he says, “is doing a fabulous job — much better than me”.

And, after attacking BHP and Rio executives last year for policies he saw as deliberately oversupplying the iron ore market, he now ­offers pats on the backs for their new management.

“The CEOs of the big companies said they were deliberately going to oversupply the market,” he says of the iron ore supply situation over the past few years. “We kept saying it should be value over volume.

“I was critical of their language. It was unprecedented in corporate history. That’s when I started my criticism of the iron ore wars. The futures market crashed, which dragged the physical market down with it. It killed the country’s biggest export.

“But they have clearly seen the light. None of those executives on the bench are there any more.

“I would like to say — on the ­record — that I do think the leadership of those companies then are now responsible.”

The leadership of Rio these days, he adds, is “very responsible”.

Forrest has always been a strong salesman for his company, which he built up to become the country’s third largest producer of iron ore. But these days the energetic, outspoken billionaire appears to be in a better place than he has been for some time.

He is not about to forecast the future of the iron ore price, which is so critical to FMG’s success, but admits that it is “a little too volatile right now”. “It’s probably not ­sustainable volatility, but it is serving the Chinese customer well, which is the main issue for the Chinese government.”

Forrest says the Chinese economy is “still strong” despite the slowdown from double-digit growth figures to recent figures of between 6.5 and 7 per cent.

“The Chinese economy is still the best managed economy in the world by a long shot,” he says.

“I am not concerned that it is about to go into rough times. It is just steady as she goes — an ­evolution from an export- and ­infrastructure-driven economy to a modern, consumer-driven ­economy.”

He makes the point that growth of 6.5 per cent is off an increasingly large base. “The size of the base is growing. So while 6.5 per cent is not as good as 7.5 per cent, it means the volumetric growth is so much higher.”

Forrest rejects suggestions China is becoming harder country to do business in. “China is still challenging for Western companies to do business with but it is way less challenging than it was 20 years ago,” he says. “The Chinese make mistakes like the rest of us but they probably make fewer than us when it comes to economic management.”

But these days, Forrest says he is spending much of his time (he estimates at least 90 per cent) on his philanthropic activities that ­include his work on improving ­indigenous living standards and his ambitious goal to “end modern slavery” through his Walk Free Foundation.

His decision to sign The Giving Pledge several years ago, promising to give away most of his wealth to charity, saw him entertain Microsoft founder Bill Gates on a visit to Sydney last week.

Forrest won’t say who was at the dinner Gates attended, ­although it is believed to have ­included fellow WA iron ore miner Gina Rinehart and Visy’s Anthony Pratt. “Bill is a passionate advocate of The Giving Pledge,” Forrest says. “He sees it as an immensely powerful long-term instrument. I am happy to encourage that attitude in him and to encourage the spreading of that philanthropic attitudes around the world.”

Forrest’s Minderoo Foundation is involved in several different philanthropic areas. But one of his passions is as anti­slavery campaign that followed a visit by his daughter Grace to an orphanage in Nepal where she found children were victims of sex trafficking.

His desire to take up the antislavery campaign, through his charity Walk Free, he says, is what promoted him to step down as FMG chief executive in 2011.

The campaign has seen him become involved with meetings of senior religious leaders, including the Pope, coming together to sign pledges to take action against slavery. It also saw him clash recently with one of Italy’s most senior prosecutors at the United Nations in Geneva over her proposals to jail business people who are found with slavery in their supply chains.

Forrest says business must take a proactive approach in the battle against slavery, with chief executives publicly committing to check out the companies in their supply chains for any instances of slavery including bonded labour.

Forrest is campaigning for the governments of the world’s major economies, including Australia’s, to pass anti-slavery legislation similar to the one passed last year in Britain. The law requires companies to report each year what ­efforts they are taking to tackle slavery in their supply chains.

“The British act has had a ­serious impact all over the world. It is tightening up how corporations behave. Now directors feel safe to look for slavery in their ­businesses.”

The anti-slavery work is on top of his work to improve the condition of indigenous workers and children in Australia that saw him advocate the introduction of a “healthy welfare card” in a report in 2014, which would see some welfare payments restricted so they could only be spent on food and healthcare.

“This is who I am,” he says of his philanthropic work. “It is my calling. I don’t want to live in a world where I pass on indigenous disparity or modern slavery to my kids.”