By Peter Milne
Mining billionaire Andrew Forrest’s Fortescue will slash 700 jobs and merge its mining and energy divisions, as the company tempers its ambition to be a major producer of the clean fuel hydrogen.
The $70 billion miner announced late on Wednesday – shortly after Forrest addressed its almost 16,000 staff – that the cuts would mainly hit white-collar roles.
Andrew Forrest addressed Fortescue’s almost 16,000 staff. Credit: Alex Ellinghausen
Since 2020, Forrest has toured the world promoting the virtues of green hydrogen as an emissions-free fuel and seeking to partner with governments that have areas suitable for producing the vast amounts of wind, solar or hydropower required.
Forrest defended the high-profile quest, which involved Fortescue assessing 150 projects across the world at one stage in the search for cheap electricity, as a targeted effort to ensure value for shareholders.
“The ‘scattergun’ critics obviously haven’t gotten a lot of new industries off the ground,” he said.
However, Fortescue’s reassessment on Wednesday highlights a realisation that producing the huge amount of energy required to separate hydrogen from water is extraordinarily costly.
Andrew Forrest promotes green hydrogen at COP27 in Egypt in 2022.Credit: Hans van Leeuwen
It now plans to switch its focus to reducing that cost. Forrest said it would enable the company to compete “blow for-blow” with “fossil fuel peddlers”.
In recent years, Forrest has set increasingly ambitious climate goals for the iron ore miner that made him Australia’s richest man.
He first charged the mine operations with the goal of emitting net zero carbon emissions by 2030, two decades ahead of the two bigger Pilbara miners, Rio Tinto and BHP.
Later, Forrest demanded zero actual emissions, removing the option to buy carbon offsets for any emissions that were technically difficult or prohibitively expensive to eliminate.
“We’ve got this unfolding miracle of Fortescue going fully green this decade,” he said.
Initially, Fortescue touted green hydrogen as vital to decarbonise its own operations but more recently its efforts have almost exclusively focused on electrifying its operations, which are heavily dependent on diesel, and ensuring that the electricity used is renewable.
Forrest’s goals covered both Fortescue’s own emissions – termed Scopes 1 and 2 – and the far greater carbon pollution from the steel mills buying Fortescue iron ore, known as Scope 3 emissions.
In late 2021, Fortescue targeted zero Scope 3 emissions by 2040 and the production of 15 million tonnes a year of green hydrogen by 2030.
“That is what the world needed, and that’s where we always start,” he said, adding that the targets were set before the “massive spikes” in energy prices in part caused by the market upheaval after Russia invaded Ukraine.
In early 2023, Fortescue committed to making final investment decisions on at least five green hydrogen projects by December 2023. It achieved two: a plant to make 30 tonnes of liquid hydrogen a day in Arizona and a $US150 million ($223 million) investment in a facility in Gladstone, Queensland.
There are no more commitments to investments, but Fortescue will keep investigating the feasibility of a project in Norway that is three times bigger than the Gladstone plant, and may also launch a study into an opportunity in Brazil.
As part of the restructure accompanying the job cuts, Fortescue will retain dual chief executives – Dino Otranto for mining and Mark Hutchinson in energy – but will merge other senior corporate roles.
Two executives who have been with Fortescue for 18 months or less have emerged as major winners. Chief financial officer for mining Apple Paget will take on that role for the entire company, and Shelley Robertson will move from chief corporate officer to chief operating officer.
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