Fortescue says executive exodus reflects green shift

Fortescue, the world’s fourth-largest iron ore miner, last month reported an 11% drop in profits, and investors are bracing for a sharp increase in spending as Forrest spearheads a move to make the company a green hydrogen pioneer. He declined to comment on the specific reasons for the departures, but pointed to a need to maintain focus within the company.

“They were good people, but we need constant alignment of interest,” Forrest said. “It’s difficult to grow a new industry, and it’s difficult to break into a new industry while you’re growing.”

Forrest also hinted at further potential departures, as he referred back to earlier plans to appoint a dozen new executives to facilitate the push into green energy, which will include investments in geothermal power, hydrogen production and the decarbonization of the miner’s vehicle fleet.

“If you talk about the C-suite, we’re nowhere near 12, and we’re upgrading all the time,” he said.

The drop in the Perth-based company’s full-year profits reflect the struggles of iron ore miners as China’s economic slowdown weighs on demand for the steelmaking material. Since reaching a year-high peak in July, Fortescue’s shares have fallen more than 15% in Sydney.

With earnings dropping from its main cash cow, Fortescue announced last week that it was abandoning an earlier policy of spending 10% of profits on the green energy arm, with metals and energy projects to compete for capital on an equal basis. Capital expenditure would be between $2.8 billion and $3.2 billion for the current fiscal year through June 30, of which $400 million would go to the clean-energy arm.

(By Eric Ombok and Mark Burton, with assistance from Jason Scott)