Andrew Forrest's plan to help the world 'build Fortescues'

Not even a terrorist bomb blast in Kabul is going to deter Andrew Forrest from pursuing his own mission in Afghanistan. If anything, it’s only made him even more determined to push on with major business and philanthropic ventures in the devastated country.

Those ambitions centre on building green technology businesses through the new Fortescue Future Industries, a subsidiary of Fortescue Metals, as well as an Afghan version of his passion for philanthropy via the family’s Minderoo Foundation.

These sound more like an impossible dream, not least because of the difficulty of achieving traction in a war-ravaged, impoverished region that has proven a bitter graveyard for Western hopes over centuries.

Yet Forrest has shown a remarkable ability to realise many of his impossible dreams – from the creation of FMG to the now global movement to end modern slavery to the massive fire resilience project to be launched in Canberra on Tuesday.

He’s not about to stop. Instead, the scale of his ambitions only accelerates as he explains in his first interview about his plans for Fortescue Future Industries (FFI).

So the danger to Afghanistan’s first Vice-President in a deadly bomb blast only confirms Forrest’s confidence in Amrullah Saleh’s selfless dedication to the nation’s future after the political leader still turned up the following day for a scheduled meeting with the Australian billionaire.

Forrest tells The Australian Financial Review his decision to invest in Afghanistan was driven by appreciation of the level of skills and talent available there despite the lack of work – backed by the firm belief he can transplant FMG culture into a 100 per cent Afghan workforce.

“Fortescue’s culture is easily its greatest asset in Australia,” he insists. “I thought ‘can we build a Fortescue culture and entire team here without doing what everyone else does – both companies and countries?’

“Having a whole bunch of expats telling the locals what is right and wrong is a flawed and arrogant operating model … But we can show them how investment which they control and operate under our guidelines and our culture can build a sustainable community. That weakens any incentive to pick up a gun.”

Renewable energy projects

Don’t bother telling him Afghanistan’s history and experience are all against him or that a booming Pilbara iron ore industry remains the most important asset for FMG investors and his own billions. He has never operated on that basis. And he insists there's only "upside" and no risk involved for FMG thanks to the establishment of FFI this year.

Forrest is talking en route from his new headquarters in Croatia, especially built to avoid Western Australia’s hard borders and travel restrictions. He will remain out of the state for months so that he can fly whenever and where ever he chooses.

His first stop before Kabul was Papua New Guinea. That was followed by Indonesia, where he also signed non-financially binding agreements for FFI to develop multibillion-dollar hydro power and renewable energy projects. This week features a visit to the Congo.

Details of the agreements signed in Afghanistan demonstrate the range of potential investments he is proposing in that country alone.

They include studies by the fledgling Fortescue Future Industries on the development of hydro power and other geothermal projects for green industry as well as of Afghanistan’s more traditional mineral resources, following a request from the Afghan government for their inclusion.

Separately, Minderoo will make philanthropic investments in areas like female cancer, early childhood development and health training programs.

But both commercial and philanthropic relationships are designed to reinforce social goals, such as equal education and job opportunities for men and women, as well as an entirely local workforce and eradication of slavery.

It is part of Forrest’s argument that the combination of business and philanthropy is best placed to produce social change by making such issues a precondition of desired international investment.

You can tolerate investments in high-risk countries because you have investments in low-risk countries.
— Andrew Forrest

“Only business can do this,” he says. “Philanthropy cannot do it. An external government cannot do it.”

Investors in FMG, however, will be more focused on how Forrest plans to utilise a fully owned subsidiary in such high-risk countries and uncertain developments.

Not surprisingly, Forrest maintains there’s only advantage for FMG shareholders because projects in different parts of the world will be financed independently of the parent company’s balance sheet.

“It’s a combination of currencies, of risks, and of global opportunities which will make an enormously attractive investment for institutions around the world when you are basing everything you are doing on a carbon-free industry and a carbon-free future,” he says.

“That is something I have been ruminating on for about a decade and working with CSIRO to ensure we have technologies available to bring that vision into reality. Investors are looking for a basket of currencies and opportunity and upside where you can tolerate investments in high-risk countries because you have investments in low-risk countries.”

He maintains the result will be "very substantial” project-financed developments which will build green industries in those parts of the world that welcome the investment.

“As a shareholder, you couldn’t ask for better,” he boasts. “A strong and growing high yield blue-chip investment which will span at least a century in Fortescue. Yet you have this cultural and leadership horsepower which other countries are strongly welcoming to develop exactly the industries you want to develop – which are green.

“We have created immense upside within a subsidiary which will balance-sheet protect Fortescue and utilise workforces entirely from other countries. So when the obvious commentary starts that Fortescue is taking enormous risk with its personnel, that just is not correct.

“We are assisting countries build Fortescues with their own populations.”

Sceptical Australian investors are likely to await results. Forrest, typically, has no doubts.