You know, how are you transporting the hydrogen, right? Not an easy thing to transport. Like there's a certain amount of pressure it has to be kept under, or it's turned into ammonia. And that's not an easy substance to move around. If you're shipping, it's got to be ammonia.
Really? No, it doesn't. I mean, you have to retrofit your pipes to normal for it not to escape.
Which is a big deal, right?
Well, look, I can say doing anything is a big deal, which is new. I mean, if we don't do something because it's a big deal, all it is is stopping the smallest molecule in the universe penetrating. That's quite a big deal.
That is quite a big deal.
Hello, I'm Briany Worthington and this is Cleaning Up. My guest this week may seem to some an unlikely climate warrior. As the executive chairman of the Fortescue Metals Group, one of the world's largest iron ore companies, Andrew Forrest is not an easy-to-pigeonhole industrial billionaire. He built Fortescue into a hugely successful company, partly thanks to his belief in taking unconventional paths. And after a serious accident meant he had to take a break from work, he enrolled in a PhD in marine science and for over a decade now has been very vocally committed to getting his company's practices aligned with a climate-safe pathway. More recently, he's also been shaking fellow CEOs and leaders out of climate complacency by highlighting the risks of lethal humidity.
I wanted to ask Andrew about the current climate crusade he's on, and specifically, as the owner and operator of a global shipping fleet, what he makes of the recent policy decisions taken by the International Maritime Organization. Carbon penalties for highly emitting ships have been recently agreed as the IMO strives to create a global regulatory framework to reach net-zero shipping by around 2050. It is a lively conversation recorded in person in London at the end of April, and we covered a wide range of other topics, including the relative roles fuels play versus electrification, hydrogen safety, electrolyzer innovation, nuclear power, and whether hydrogen is a greenhouse gas. Andrew was charming throughout, but he didn't pull any punches. I hope you enjoy this conversation as much as I did. Please welcome Andrew Forrest to Cleaning Up. Andrew, can I call you Andrew?
Briany, Andrew, Twiggy, whatever you like.
Okay. I'm so delighted you've managed to find the time to be with us today, but I just wanted to kick this conversation off with asking you to introduce yourself in your own words, please.
Hey, Bri. I'm Andrew Forrest. I'm chairman and founder of the Fortescue Group, Tattarang, which is one of Australia's largest private equity groups and is leading the energy transition in Australia, and the Minderoo Foundation, which is a global Asia-Pacific-based philanthropic group.
Fantastic. And well, the reason we're looking to get you on is because you have become something of a towering figure in this conversation about the transition from traditional fossil fuels-based economies into the clean future. And I wanted to know, like, what turned you onto this.
Oh, look, we became really sensitive to what was happening around the climate as early as 2013. We couldn't see a way out. We knew that commerce wouldn't stop doing commerce because people needed to make a profit to pay the taxes to keep the roof over everyone's head, the hospitals, schools going. So we knew at the end of the day it had to come down to commerce. But we couldn't see a replacement for oil and gas until we discovered hydrogen and the possibility of making hydrogen out of solar and wind. And so I'm not sure if it's us or others who coined the term green hydrogen, but I think we were the first to run major studies in 10, 20, 30 gigawatt scale to convert that electricity to hydrogen with water. And we did that back in 2013.
But in 2014 late, I had a really serious accident and I came out of hospital in a wheelchair and my kids basically persuaded me, 'Hey dad, you've always wanted to study the oceans. You've always been worried about the climate. Now's your time to go back to university, go back to school.' And so I did. I applied for a master's. They rejected that. They said, 'No, you've been doing research for 30 years. You know how to do it. We'll accept you for a PhD.' And I was a bit shocked by that because I thought two years would be plenty and I knew a PhD would be four of hard work. And in the end I agreed to do a PhD and I chose marine ecology and I wrote a thesis called Solutions for a Troubled Ocean. And in that thesis I discovered the tremendous damage which is being done to the oceans where 98% of the world's livable environment is, and that we're only seeing the little fractions of damage which is happening in the land or terrestrial environment. Yet that is severe. That is really severe. So I thought I've got to devote everything I can to stopping global warming. And I'm not sure if it's just in time or if I'm too late, but I'm very glad I'm myself and every group, every company, every philanthropy, everything I do is committed to the cause of ending global warming.
But in that account though, when you were first thinking about the energy transition, that was pre that PhD, and was that what was driving that? What was it? Was it pressure from your board? Was it investors? Was it just your grandchildren? What was the...
No, look, it was general reading. It was chatting with the kids. It was understanding the perspectives which were concerning them, then re-researching those perspectives. Are these perspectives real? Are they just marketing? And I thought no, actually my concerns and their concerns, they're coming from two different directions. Theirs is more around consumerism, mine's around heavy industry, but the two concerns are aligning. So look, it was genuinely a joint family effort to really weaponize us as people who were going to take on global warming for everything we could.
And so being a... Well, let's talk a little bit about Fortescue and the story there because obviously you grew this to be an incredibly successful company and you did it kind of against the odds, didn't you? You took a kind of big bet that paid off. Tell us about that.
Oh, look, the seaborne iron ore industry is one of the most immensely profitable and most viciously protected, highest barriers to entry industries in the world. It was run as good as a cartel back then. And I felt that was dangerous. I don't think it was serving the interests of Western Australia. And I grew up in this region. I actually grew up in the Pilbara regions. And I thought there's only one way to go at this. You either attempt to be huge or nothing. There is no middle ground in this business. I remember an Anglo American executive who tried but failed to crack Anglo, then the world's biggest mining company, into the iron ore sector. And I said, 'Why do you want to get in iron ore?' He said, 'Where does an elephant sleep?' I said, 'I don't know.' He said, 'Wherever it wants.' And so I figured that he meant this is a giant's game, stay out of it. But look, I took it on. We did break whatever it was, a cartel or an understanding. It became every company for himself at that stage, or herself. And that was a very good thing because that was on the cusp of China's production of steel exploding if it had supply. And my argument was China and Asia's consumption of steel is going to go through the roof. We're not going to be ready. You're restricting supply to try and keep everyone else out. That's going to be seen as wholly irresponsible. We all need to — BHP, Rio Tinto, Vale, Fortescue — we all need to massively increase our production. No one company will be a hero here.
And so what was it then that you bought a big land bank, that you managed to break the cartel, and it was kind of low-grade iron ore?
Yeah, look, it was super interesting. There was a kind of agreement back then, just in the mining sector, in the mining compliance sections of government, that if you're in the Pilbara and you're BHP and Rio, you didn't really have to comply with the Mining Act because you'd done enough for the state. And I just thought that thinking was completely upended. I mean, it was crazy. I mean, the state's done so much for them, not the other way around. And so I challenged the fact that these companies were holding basically vast areas of land without any obligations to the Mining Act to maintain their rights to hold that land. So I challenged them. I challenged BHP. I challenged Rio Tinto and I challenged the government. And we're a tiny company. Everyone laughed, but I said honestly my lawyers are going to be as good as yours. And in the end the government woke up and said to BHP, 'He's right. Drop all those tenements, drop all that land.' And of course they did and we pegged them.
Wow. So you were using your insights into the law and the policy government to get that edge and that wedge in.
To get that edge. Well, and also many companies had tried to break in but they just accepted that there was this unwritten rule that you couldn't challenge the big guys in the Pilbara.
And I thought you were kind of like a David and Goliath story with a very good weapon of law.
I was prepared to have a crack.
Good. Yeah. So courage is a part of your DNA then. Taking these big bets.
I think an easy understanding that failure is a real option and should be embraced. And if we were rebuffed back then, we failed. Come back and have another crack another way. But failure is the best learning source you can ever put.
That's quite a nice segue for my next question, which is, as you described it, you were looking for a substitute for your main source of emissions, right? Which presumably fuels going into your equipment and your ships and then the emissions arising from the processing of your ore. But you were looking for a fuel substitute. Is that fair? Is that a fair characterization?
Yeah, look, we're always fans of green electrons, of green electricity. We could see the common sense in it in the emergence in those early days of batteries, cables, etc. But what we felt we needed for huge ships and for massive industries is a fuel. And so we went after hydrogen and we spent six, seven, eight years failing and I think now we're on the cusp of success.
What makes you confident that you're on the cusp of success?
That we have been able to make electrolyzers which were the size of that great big table there, and that's if you want a PEM electrolyzer it'll look like that only four times higher, and we've now been able to make the same power electrolyzer smaller than this chair.
But what do the economics look like?
The economics have improved with the scale and simplicity. So as that electrolyzer which is on the marketplace now is hugely complex and enormous, this electrolyzer is small and simple yet makes the most of the energy being fed into it. It'll use 95% of the energy. The standard electrolyzer will use 60 to 70. So you waste 30 to 40%. We waste four to 5%, like next to nothing. And that all goes into making hydrogen.
But are you somewhat concerned that if you rank hydrogen versus sort of other substitutes? So we could talk about the bioethanol or even just using the electrons directly and using big cables to move around, that hydrogen may lose out just because of the round-trip efficiency and that it's just a difficult molecule to work with. Right?
Look, it's a really fun molecule for anything which is making a fuel. Hydrogen is the only way to go if you want to be sustainable. As soon as you go bio this or you've got anything with a C in the chemical chain or anything which competes with food, which is anything which is bio, you've got a really big problem. I mean, I fly over Papua New Guinea where we have a number of historical archaeological projects, and there the country is being raped by palm oil. Now if that palm oil stops being used for food and starts being used for fuel, you're just going to see destruction of jungles all over the world. I think if we look at bioenergy as anything more than a boutique specialist very small fuel, then it's dangerous for our environment. The only way to get an infinite source of fuel at a competitive cost is hydrogen.
Just to be devil's advocate, there'd be many people who would say that actually the burning of fuel is what's going to reduce down to a very few number of uses because we can use direct electrons. Now, we've all had our moment where hydrogen seems like the silver bullet for everything. I certainly did until I was put right by a professor in Cambridge who pointed out to me some of the thermodynamics and the...
Cambridge is very half right. I mean, I have it out with academics all the time. So if he's from Cambridge, just down the road are three large battery-electric centers, both in research, manufacturing, all Fortescue. I invite your professor to go and see them. We are world-leading in British batteries, both huge industrial use and racing cars. You know, we charge our racing cars in 20 seconds. So super fast, super powerful. Britain through Fortescue is leading the world. However, it's not going to answer world shipping. It's not going to answer massive industrial heating. There's only so much you can do with electricity and batteries.
Yeah. That becomes a scale issue. Let's move on to perhaps considering some other...
Batteries are at 15, 20% of their penetration. They've still got 500% more to go.
Right. Exactly. And interestingly, when it came to your own vehicles, your own kind of heavy machinery, tell me the story about how, because those have been electrified, right? They're not running on hydrogen.
Oh, look, we have what we call massive boosters. So these are charges not much smaller than this room. They're great big hydrogen fuel cells. So they go out to our remote operations with fuel on them and they charge the battery system of our trucks and our diggers, etc. So yes, when you're looking at very large storage, our hydrogen mobile charging units are fantastic. Batteries though have a huge future. So we don't have one horse in the race, hydrogen. We are the prime technologies for Britain, perhaps Europe, in the research of batteries, getting hard in the production of batteries, and also in the production of hydrogen.
If you ignore hydrogen, you ignore it at your peril, right? We would never... Yeah. Tread on hydrogen. But I think that's what most people say. You back a few horses and for certain cases, some things are going to come out as the lead, but it's not the Swiss Army knife that's going to solve all the problems.
Yeah. Let me give you an example. I mean, if you want to send energy a long way, say overland, you've got all these massive pipelines transporting gas. They're not transporting power. They don't burn the gas, make electricity and then overhead cables. They transport gas because the loss on transmission of overland, undersea cables or transmission lines is really serious.
Well, it wasn't until the Chinese got involved, right? I mean, the HVDC high-voltage cables now are, you know, they're doing a thousand kilometers and still experiencing a drop of 10 to 15%. But when you're docking into, you know, vast amounts of solar in Morocco or, you know, huge amounts of, let's hope, hydro and nuclear in Canada, the distance...
You're sounding like a person who doesn't have to pay for it.
Well, no, I say the opposite of 15% is massive, but if you convert an electron to hydrogen, you're taking what, 60% out in terms of round-trip efficiency.
That was the truth, right? Ours do 95%.
So I gave you that stat, you already knew it, 60 to 70%.
Yeah, but our electrolyzers are running at 95, 96%.
So, and why is that? Why are you able to sort of apparently defy the laws of thermodynamics?
No, it's just simplification. I mean, if you see an old rocket engine, it'll be absolutely massive and complex. And if you see a modern rocket engine, it'll look like a pole. It's not defying anything. It's just better technology.
Well, let's see. I mean, unless that's the economics that I've been seeing in terms of how much of a carbon subsidy do you need to get hydrogen into these use cases.
Well, I mean, I'm hanging... No, let's explore it because I'm used to these old arguments because they're based on old technology. So we are proposing from North Africa to Europe connections which will be driven off solar, which is not the solar you know now. Will be driven off wind. They won't look like the wind towers you're familiar with now. And they will transport short-distance electrons and long-distance hydrogen. And that hydrogen will be fed straight into gas turbines, which will click on just like a normal coal or gas turbine clicks on when the sun goes down and maintain 24-hour renewable energy. If you want 24-hour renewable energy at the sovereign scale, you've got to have something bigger than a battery.
No, I agree. But I would, you know, how are you transporting the hydrogen, right? Not an easy thing to transport. Like there's a certain amount of pressure it has to be kept under or it's turned into ammonia. And that's not an easy substance to move around. If you're shipping, it's got to be ammonia.
Really? No, it doesn't. I mean, you have to retrofit your pipes to normal for it not to escape.
Which is a big deal, right?
Well, look, I can say doing anything is a big deal, which is new. I mean, if we don't do something because it's a big deal, all it is is stopping the smallest molecule in the universe penetrating. That's quite a big deal.
That is quite a big deal. I mean, already we've got methane slip, right? And that's quite a big molecule. You are going to see a lot of hydrogen escaping, aren't you? I mean, you are.
Well, look, we have been operating hydrogen for several years now in our plants. We haven't had any slippage. No slippage. It likes pipes. And lining oil and gas pipes, delinquent oil and gas pipes which are all around so they can take a great deal of pressure is absolutely feasible.
Now, I'm not arguing that it electrific... You seem to be saying is you're either anti-hydrogen or pro-electrons. That's a big mistake.
You send an energy two or three thousand kilometers. The loss on transmission, doesn't matter what cable you use, it's going to be too big.
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I think my argument is really that you can't criticize transmission for a 10% loss and use a cost argument against that when there is a cost to using hydrogen as a fuel because if you're just using the electrons, you can displace fossil more directly. You get like two to nine times more carbon saved if you're...
That's pretty great for all our cars and many of our small factories, but what do you do with a 350-ton ship?
I think it comes back to ships, right? Or ships, maybe fertilizers. There's some definite use cases. And I'm wondering, like, we just had a bit of a breakthrough at the IMO, right, where the shipping industry... So tell me, did Fortescue get involved in that fight? Did you use law there to...
Yeah. No, we can't use law because it doesn't exist, but we're asking governments to create laws. We had the Green Pioneer, which is the world's first ammonia-fueled ship. I took Sylvia Earle on that ship in Dubai. We were originally blocked from sailing it into COP28 because it's an oil and gas mecca. Are COPs there to promote oil and gas or to fix the world? In recent years it's been very unclear, but maybe Brazil will bring us back to focus. Well, hopefully, but our ship wasn't allowed in and we had to switch off all its ammonia-based systems and sail it in under vegetable to be able to dock it. There I took Sylvia Earle, who I regard as one of the world's greatest conservationists, and she said, as she would, super smart, 'Show me the smokestack.' I mean, it's a great big ship. Show me the stack. Because on all ships they've got great big smokestacks for huge emissions. And I did. I took her, because the whole system is laid out like a deconstructed hamburger on the deck. You can see everything. And I took her up to this little pole and she said, 'Is that the smokestack?' And I said, 'Yes, Sylvia, that's the smokestack.' And she said, 'Oh my god, my dear, that's a tear dropper. There's like nothing.' So we had the Green Pioneer on Canary Wharf in London, saying, 'Hey, IMO, that's where your meetings are. Don't say it can't be done. It's done.'
This is a ship and this is the start. And by the way, you've solved all the concerns about the sort of engine room safety because, you know, this is essentially bleach, right, that we're talking about here. You know, not a nice substance to work with, but you got the engineering all okay.
Yeah, look, if you played with petrol, it's not a nice substance either. We use just a basic tech called twin skin, which is instead of having one skin, you have two. Inside that second skin, between the first and second skin, is a detector. That meets every possible safety requirement. If you have a leak, we haven't, but if you did, it's of course blocked inside that second skin and then an alarm and etc., all the safety regulations. So we've had an incident-free number of voyages. Now we're the first, we're the pioneers. And we are demonstrating that ship wherever the IMO meets to say this is the time to walk away from fossil fuel. And every time I see Chevron or Exxon or Shell in the negotiating room or in the presentation room, I say, 'Well, sir, what are you doing here?'
