Forrest’s Fortescue Metals Group is conducting a global search for a chief executive to replace Elizabeth Gaines, who has announced plans to step down from the job – but retain a role as a director and a green energy “ambassador”.
In an interview with The Australian in Sydney this week, Forrest made it clear that he was not just looking for a chief executive for Fortescue to slot in when Gaines steps aside; he has broader plans to hire a high-level executive team to beef up FMG’s capability to make the transition from a pure iron ore play to a global clean energy company.
This follows the establishment of Fortescue Future Industries as FMG’s green energy arm, which was announced in Forrest’s speech to the Fortescue annual meeting in November 2020 – an address he gave from Paraguay.
FFI is rapidly transforming from Forrest’s new baby into a strapping teenager that is getting an increasing amount of Forrest’s time and attention – and FMG’s money.
Expect more interesting high-calibre appointments – maybe not quite as surprising as Guy Debelle’s move from deputy governor of the Reserve Bank to chief financial officer of FFI, but still a significant building of executive capacity and expertise in the combined FMG/FFI group.
“To convert Fortescue from the world’s most efficient iron ore company to the most efficient renewable energy company we don’t need one person – we need a team of people,” Forrest said when asked about Gaines’ replacement.
“We need a team – about 10 to 12 — some of the best people to form a champion team to take this forward.
“Not a team of champions, but a champion team.”
Forrest has said FFI will get 10 per cent of net profits after tax from FMG – an estimated $US1bn ($1.3bn) in the last financial year – to help its growth, with any additional financing needed to be raised on its own account.
Forrest has made several trips around the world in the past two years, signing up bold new deals, such as the recent major deal with Germany’s largest energy group, E.ON, to explore shipping green energy from Australia to Europe.
The agreement with Fortescue Future Industries will look at ways to ship up to five million tonnes of hydrogen generated from renewables to Europe by 2030.
The deal struck with E.ON could potentially deliver up to a third of the energy needed by Germany to replace the gas it currently gets from Russia.
The FMG/FFI “champion team” already includes FFI chief executive Julie Shuttleworth, who is based in Perth, and Debelle, who starts in June and will be based in Sydney, and is set to play a key role in raising funds for FFI.
Forrest made it clear that the search for the people to take his company to the next level was a global search – he is not just looking at the local talent pool.
He indicated that he didn’t want a traditional corporate structure that would see a lot of talented people being several layers below the chief executive and key decision makers.
Currently based in Forrest’s home town of Perth, FFI is building a hub of people in the US, which Forrest clearly sees as a major new market.
In October last year FFI announced it was hiring Paul Browning, the former head of Mitsubishi Power North America, as the chief executive of Fortescue Future Industries’ US operations, based in Florida.
In his interview with The Australian this week, Forrest spoke highly of Browning, whom he took to a meeting at the west wing of the White House to explain his vision for green hydrogen-based energy to the Biden administration.
Forrest also indicated that he was ready, willing and able to have FFI buy into 22 power stations currently fired by coal in the coalmining state of West Virginia, with a view to having them powered by green hydrogen.
Announcing Browning’s appointment, FMG said it would be the “first of many appointments which FFI is undertaking to establish its leadership in the rapidly growing North American green hydrogen market, continuing the expansion of its global strategy”.
FFI has the ambitious goal of delivering 15 million tonnes a year of renewable green hydrogen “to the world” by 2030, increasing to 50 million tonnes a year in the next decade.
Commenting on his new role, Browning said FFI had “an ambitious plan to assemble a team of industry experts that will build a multimillion-dollar green hydrogen business and drive North American leadership in this exciting sector”.
Forrest has established a relationship with powerful West Virginia senator Joe Manchin, whom he visited recently in his state, and who has so far blocked Joe Biden’s proposed green energy bill.
Forrest argued to Manchin that green hydro could help generate and retain jobs in a state, where people are leaving because of the decline of the coalmining industry.
It is a connection that could prove useful in Forrest rolling out his green hydrogen vision.
Forrest insists that there are no plans to spin off FFI as a separate company from FMG.
That is probably right, as FFI is a cash burner at the moment, not a cash generator.
Forrest has plenty of sceptics who question whether he can make green hydrogen economical in the foreseeable future.
These include those from the current big oil players such as Shell – as well as some traditional FMG shareholders who just want it to be in an iron ore company.
Countering that, Forrest argues that he has been through this before, when the sceptics poo-pooed his ambitions years ago to build up FMG because of its access to lower-grade iron ore – only to turn it into a global player making billions of dollars a year.
He can also point out that FMG is attracting new shareholders pleased at its new green agenda, including Los Angeles-based fund manager Capital Group, which has just over 5 per cent of FMG shares.
Forrest is not only used to being an outsider and a pioneer in new fields, he enjoys the challenge.
Past performance, as they say, is not necessarily an assurance of future success.
But Forrest is certainly giving his green energy/green hydrogen vision a red hot go.
Watch over the next few months and years as the FMG cheque book comes out and puts together an even more interesting team of executives who will be charged with delivering on Forrest’s bold green energy plans.
Andrew Forrest’s ambitious green energy push is set to step up even further with some high-level global hires that will be announced over coming months.