Twiggy slams BHP, Rio for ‘high-grading’ iron ore

Fortescue chair Andrew Forrest accuses BHP and Rio of “high-grading” their Pilbara iron ore mines for short-term gain.

Fortescue chairman Andrew Forrest.

Fortescue Metals Group chairman Andrew Forrest has reignited his long-running feud with rival mining giants BHP Billiton and Rio Tinto, accusing the duo of “high-grading” their Pilbara iron ore mines at the expense of their long-term future.

Speaking to reporters after the company’s general meeting in Perth yesterday, Mr Forrest said the big miners’ focus on the higher-grade portions of their iron ore deposits would hurt future generations.

“If you boast about your high grade (mines), you’re really boasting about shortening your mine life by making your ore bodies less valuable over time and just more valuable over your career at the company,” he said.

“The right way to go is to mine everything you can, go the extra yard to process it, value-add it, and have bigger ore bodies. Even if it’s lower grade, you still have happy customers.”

Mr Forrest and the big miners, who have been involved in numerous stoushes over Fortescue’s history, had briefly found common ground in recent months in their opposition to the new $5 per tonne tax on iron ore production from BHP and Rio proposed by WA Nationals Brendon Grylls.

Yesterday’s outburst showed that the unity on the Grylls tax was the exception to the rule, with Mr Forrest rounding on the heavyweights for continuing to concentrate on grade.

Fortescue has fundamentally overhauled its business in recent years by mining lower-grade iron ore material and upgrading it through a relatively simple beneficiation process. The change in plan has led to a big improvement in Fortescue’s cost base by significantly reducing the amount of waste rock it needs to move to access each tonne of ore. The new mining process has driven a sharp appreciation in Fortescue shares this year, lifting the value of Mr Forrest’s stake by more than $4 billion to around $5.4bn.

But Mr Forrest said he was also “delighted” about what the new mining methodology would mean for the future of WA.

“What I care about is that if you have a heritage called the Pilbara, which is one of the most valuable assets in the entire mineral world, then you have a responsibility to husband those assets,” he said.

Mr Forrest’s comments came as the company announced the latest regeneration of its board, becoming the first company in the ASX Top 20 to have five female directors. BlueScope Steel and Dexus Property Group director Penny Bingham-Hall and Deloitte partner Jennifer Morris will both join the Fortescue board, with long-serving directors Owen Hegarty and Geoff Raby both announcing plans to retire.

Shares in Fortescue closed 14c lower to $5.43 amid a broader market sell-down.

Mr Forrest said he expected the market to settle down following Donald Trump’s presidential election as investors realised that safeguards in the US political system ensured that “irresponsibility won’t happen”.