Tuesday, January 18

Billionaire miner sees the next fortune in search of clean energy

It took Andrew Forrest just over a decade to build an iron ore empire to challenge the world’s big companies. Now an equally ambitious timeline has been set for creating a global powerhouse in clean energy.

The Perth-based billionaire, widely known as “Twiggy” in Australia, has been scouring remote regions of the planet, such as Kyrgyzstan and the Democratic Republic of Congo, looking for investment opportunities in renewable energy and hydrogen production. He also wants his home country to become a world leader in the nascent hydrogen industry and earlier this week announced plans to build a giant factory in Queensland to manufacture the equipment necessary for its production.

Hydrogen would rival coal as a key input in steelmaking within a decade, Forrest said in an interview with Bloomberg Television on Thursday.

“Let’s stop wavering, let’s stop wasting time and go green as soon as possible,” he said.

Forrest’s deep dive into climate-related businesses comes as the company he founded, Fortescue Metals Group Ltd., sets a goal by 2040 of achieving net greenhouse gas emissions from its steel customers. Now the world’s fourth-largest iron ore producer, it is unique among its peers to commit to that goal for so-called Scope 3 emissions. Hydrogen is central to that plan, and the company plans to become a major producer and develop clean gas technology to replace coal blast furnaces.

To reach that goal, Forrest, 59, will have to prove his skeptics wrong, including BHP Group, the world’s largest mining company. BHP has said it will work with clients to reduce the carbon intensity of the steelmaking process by 30% over the next decade, but has declined to set a net zero goal, citing technical challenges facing the industry.

Lowering costs will be key for Fortescue to achieve its ambitions. A Bloomberg New Energy Finance report in August found that most of Australia’s planned hydrogen production in 2030 would be delivered at a price above $ 4 per kilogram, making it difficult to compete with other suppliers. “Global demand for clean hydrogen is just emerging and competition for sales will be fierce,” the report says.

Meanwhile, Forrest’s plans in Queensland put him in direct competition with China, the world leader in making electrolyzers that can produce hydrogen that can be stored and transported and eventually converted to carbon-free energy for power or transportation. His drive to develop renewable energy capacity also pits him against large energy companies such as Royal Dutch Shell Plc and BP Plc, which are increasingly focusing their investment on wind, solar and other low-emission technologies.

“Australia is a world leader in having everything the green future needs: all the sun, all the wind, all the elements of renewable electricity,” said Forrest. “Almost 100% of the manufactured items that go into the solar industry come from abroad, it’s time to stop that. We are going to be a massive consumer of photovoltaic cells, wind turbines, everything to build that green future, let’s build it right here in Australia ”.

Forrest called on Australian Prime Minister Scott Morrison to show leadership on the green transition, including a commitment to attend the COP26 climate summit in Glasgow, which begins later this month. “Our prime minister will be even better known worldwide, and unfortunately here, if he doesn’t go, he will be seen as the standout, not COP26, but the policeman.”

Forrest is the fourth richest person in Australia, with an estimated net worth of $ 16.3 billion. The great-nephew of Baron John Forrest, the first Prime Minister of the state of Western Australia, grew up on a remote cattle ranch where he did his first studies via shortwave radio.

After becoming a stockbroker and overcoming an initial setback when a nickel project he led failed, Forrest was able to guide Fortescue into iron ore production in 2008, just as China’s appetite for steelmaking became insatiable. . The task included building the company’s own rail and port infrastructure.

Although he stepped down from his CEO role a decade ago, he still owns a 29.8% stake in Fortescue through Minderoo Group and remains its chairman. In recent years, Forrest has strengthened his interests in the livestock industry, studied marine science, and promoted indigenous welfare issues and the fight against modern day slavery.

Future Industries

Industry watchers say Forrest’s track record means that the upside potential of his clean energy foray should not be underestimated.

“Andrew has managed to position himself at the forefront of some pretty monumental developments within the resource sector,” said Gavin Wendt, a senior analyst at consultancy MineLife Pty Ltd., noting that the emergence of Fortescue had been timely to tackle a boom in China. . metallurgical industry. “Now he has positioned himself to be a key player in the emerging hydrogen energy industry.”

Fortescue has committed up to 10% of its annual profits to invest in green initiatives, which will be led by its Fortescue Future Industries unit. Forrest wants the company to produce 15 million tons of hydrogen a year by 2030.

© 2021 Bloomberg


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