Spotlight - March 2024

Iron-ore magnate Andrew “Twiggy” Forrest has almost become legend. He has grown a USD 17.5 billion family fortune from scratch, and is now among Australia's largest philanthropists.

Last year, he also ran full-page ads in the New York Times, Wall Street Journal, Financial Times, and the Times of India showing an ostrich with its head in the sand and the caption, “Oil and gas, here is the science you’ve missed.”

He’s also organised an anti-trafficking conference at the Vatican, wants to transform Australia into a renewable energy superpower, and in his spare time has finished a PHD in marine biology.

“We are not about creating a Forrest dynasty, we’re about helping others.” Andrew Forrest.

The remote cattle station

Like many self-made men, he had humble beginnings in the red dust of a farm with fading echoes of a grander past.

Forrest can trace his family tree back to Scottish immigrants who settled south of Perth in 1842. Forest’s great grandfather, David Forrest, was one nine sons from the family and built the Minderoo station in the Pilbara region of Western Australia. His brother, Sir John Forrest, was the first premier of Western Australia.

Andrew Forrest grew up on the remote Minderoo cattle station and helped out as a jackeroo while attending school via shortwave radio.

Minderoo had been in the family for over 120 years when drought and dwindling prospects forced Forest’s father Donald to sell it in 1998. While Forest had long since left home, his love for the family station and the Pilbara never left him. In 2009, he bought back Minderoo for AUD 12 million.

The enthusiastic entrepreneur

“My greatest love in life is to develop projects. I just get a huge kick out of that. I’ve been doing it ever since I could.”

After graduating from the University of Western Australia with a Bachelor of Arts majoring in Economics, Forrest wanted to become a stockbroker.

It was 1983, global stock markets were booming and Perth was pulsing with brash mining entrepreneurs like Alan Bond of America’s Cup fame. There were also many old pastoralists who had made it big with mining stocks and were looking for the next big mining IPO. 

Forest initially struggled to find work but despite many rejections he didn’t give up. Eventually, his sheer enthusiasm got him his break when he offered to work for free for the first three months.

He didn’t look back. Applying himself, he left behind his childhood stutter and quickly developed the reputation as a smooth-talking salesman.

By 23-year, he was running the Perth office of Sydney stock broking firm. The office quickly built an upstart’s reputation for aggressive dealing in energy and mining stocks. Champagne and beer flowed like water on St Georges Terrace but it was not to everyone's taste. When the Australian stock market crashed in 1987, Forrest moved east to Sydney.   

However, while he had swapped his moleskin chinos and a blue chambray shirt for a business suit and the Swan River for the Parramatta, he was still a Pilbara boy and an entrepreneur at heart. When he noticed that global stainless steel prices were growing strongly, he saw an opportunity and decided to swap his broker screens in Sydney for red dust mine tailings back in Western Australia.

In 1995, at 34 years, he founded Anaconda Nickel to mine nickel and cobalt in Murrin Murrin, about 3 hours drive north of Kalgoorlie. Hitting the rolodex, he raised over USD 800 million in investment and prospects were bright. 

But Forrest’s relationship with major shareholder Glencore soured, and when Anaconda’s processing plant ran into problems, the relationship fell apart. In 2001, Andrew was forced out  and Glencore was able to step in and take full control. Many investors lost money and blamed Forrest. He was devastated. In 2002, Glencore transformed Anaconda into Minara Resources and the company has since delivered on its early promise.  

Iron ore and the “Great China Boom”

However, Forrest was not about to give up on mining or Western Australia. He was convinced that China’s growth was about to spark a mining boom in minerals such as iron ore, and he wanted to be there for the ride. There was only one problem, the iron ore business was dominated by the two big boys of Australian mining: BHP and Rio Tinto.

In 2003, he began to buy up shares in a small mining company called Allied and Mining and Processing which had less than 500 km in mining tenements in his beloved Pilbara region. Renaming the company Fortescue, Forrest began to buy up mining leases between the Pilbara operations of BHP and Rio Tinto. It was flat ground that the two mining giants had little interest in

“Eighteen years ago, I was just a young upstart trying to set up Fortescue. Everyone told me I was crazy to take on BHP and Rio Tinto.”

In acquiring many of the leases, Fortescue had to negotiate with traditional land owners, some who Forrest knew personally. Some critics argue that some of his deals with traditional owners were less than generous and overshadow his many philanthropic works in the area. In 2024, the Federal Court is expected to hand down a decision on the long-running legal case between the Yindjibarndi people and Fortescue over compensation.     

Letting nothing slow him down, Forest started Fortescue’s first mine in 2006 (Cloudbreak) and the second in 2008 (Christmas Creek). He also built a processing plant, and a railway line from the two mines to new port facilities at Herb Elliott Port over 280 km away, all within two years. The speed of development was unprecedented in the industry.

“We are well and truly the New Force in Iron Ore and already rank as Australia’s third largest iron ore producer in just our first full year of operation.” Herb Elliott, Fortescue chairman, 2009 Fortescue Annual Report.

As the China boom kicked in, the price of iron ore rose from USD 13 a tonne in 2003 to over USD 180 a tonne in 2011 and reached a peak of US 215 a tonne in July 2021 (see chart below). At the same time, Fortecuse was able to reduce the cost of extraction from USD 30 a tonne in 2008 to USD 16.90 a tonne by 2015.

In the process, Fortescue has become one of Australia's most valuable companies and Forrest one of Australia’s richest persons.

In FY 2023, Fortescue shipped over 192 million tonnes of iron ore and made a net profit of USD 5.5 billion after tax. 

“Your company has shattered the iron ore duopoly which existed in the Pilbara for many decades and firmly established itself as a viable alternative supplier for the steel mills of Asia and the world.”

Giving back

“Wealthy people in Australia tend to give, and give very quietly.” Andrew Forrest.

After meeting his enormously high personal and corporate ambitions for Fortescue, an older and more mature Forrest set his sights further afield. He, as many magnates do, began to think of his legacy.  

Forrest and then wife Nicola set up their Minderoo Foundation in 2001. In 2008, they became the first Australians to sign up to the Bill Gates’ “Giving Pledge”, which is a commitment to give-away over half of their fortune to charitable causes before they die.

Today the Minderoo foundation has an endowment worth around AUD 9.6 billion. It has been generous in supporting many causes including indigenous education and employment schemes, anti-human trafficking efforts, infant development, supporting Forrest’s alma maters, and supporting the rebuilding of Ukraine.

Australia the “Green Superpower”

In recent years, Forrest’s sense of responsibility and his enthusiastic focus has turned to the biggest issue of our times: climate change.

“There are problems in this world and you shouldn’t worry about it but if you can do something about it, do it, get on with it.” advice to Forrest from his father Donald  in 2023, just before Donald died.

From early on, Fortescue invested in innovation to bring down costs and to reduce their environmental impact. For example, they developed a groundwater management system at the Cloudbreaker mine that returned around 73% of extracted water back into the local aquifer. Further, in 2011, Fortescue introduced a  Climate Change and Energy Management

Policy and began to focus on not just seeing emissions and climate change as a problem but as an opportunity.

However, after a world-wide trip in August 2020 where he visited world leaders, businessmen, and financiers, Forrest’s green ambitions roared into a new phase.   

“I felt a change in the global mood, a shift in belief, that the impossible could be possible.  … IIn short, my time on the road made me realise that our ambitions, while risky, are far from radical.”

Adding to Fortescue’s ambitions for net-zero emission by 2024, Forrest decided that Fortescue should invest in green hydrogen created through renewable energy, and green steel making.

However, more importantly, he has become an evangelist for combating climate change and for turning Australia into a green powerhouse.

“The green hydrogen market could create revenues of USD $12 trillion by 2050, way more than any industry that exists today. Even Australia's enormous iron ore sector, which has an export revenue of more than $150 billion, is barely one-100th of this.”

In 2022, Forrest’s renewable energy company Squadron, invested AUD 3 billion into solar farm operator Clark Creek and also bought Australia’s largest wind power company CWP Renewables for USD 2.7 billion.

In 2023, Fortescue announced that it was investing USD 750 billion in a 80 MW hydrogen plant in Phoenix Arizona, a 50 MW hydrogen plant in Gladstone Queensland, and a green-iron test plant at Fortescue’s Christmas Creek mine in Western Australia.

In January 2024, he announced a target for Squadron to build 14 GW in new clean energy in Australia by the end of the decade. There are also plans to invest in clean energy in countries like Brazil, Kenya, and Norway.   

Forrest has also used his growing international influence to lobby for the fight against climate change at the global level. He attended the COP28 climate summit in December 2023 where he added his voice to calls for phasing out fossil fuels. This included taking out full page ads in many of the world’s leading newspapers. 

“We need just a simple understanding that there’s only one question we should ask, which is: when are you going to stop burning fossil fuel?”

He has also written an open letter to world leaders with the signatures of over 60 leading scientists on the ”threat to humanity from rising levels of humidity.” Humans cannot survive in wet-bulb temperatures above 35 degrees celsius. 

Final thoughts

Forrest was made Australian of the year in 2017 for his business and philanthropic services to the nation. 7 years later and not only is he not slowing down, he is accelerating. He is taking on projects on behalf of Australia and the world.

Despite humble beginnings, mistakes, and setbacks, Forest has built a billion-dollar empire and charity foundation. Now he wants to help tip the scale from a dire environmental dystopia towards endless renewable energy, with his beloved country leading the charge.