Dr. Andrew Forrest, thank you so much for your time, mate. Andrew to you. How are you?
Now, you've flown in from Europe.
What have you guys been doing over there?
Working like a blue tongue lizard, mate. Flat out. Yeah. But yeah, just really was in Ukraine, Norway, just trying to give them a hand over there, and persuading people that it's better to stop burning diesel and have homegrown electricity.
I find that so, so fascinating because you guys burn, what is it, close to a billion litres of diesel?
Yeah, a billion litres of diesel equivalent a year. And in two or three years' time, and I've been called a nutcase for the last three or four years, so I'm kind of used to it. But we'll switch it all off. And of course, with diesel prices now going through the roof, that's a billion litres of diesel which goes back to mums and dads.
We don't compete with them anymore. I love it.
And we'll save a bottle, too.
Oh, certainly. Certainly.
And now we're here at the RM Williams HQ. Now, you brought RM Williams.
It's so good. I got the belt on.
Got the RM Williams goodies.
I heard you guys are doing the Commonwealth Games in Queensland.
Yeah, we absolutely are. But I mean, it's so Australian, and you see RM Williams, and you see RM Williams boots on the wildest people anywhere in the world, and you just think, 'Oh, go Australia.'
What made you want to bring it back to be Australian owned?
Just that, you know, I grew up with Akubra. I grew up with RM Williams. They're so essentially Australian. I've, you know, used to hear whispers that Akubra was going to go offshore. Then RM Williams went offshore by big French companies. What a disaster, mate. Having an Australian icon owned by a bunch of, well, I won't say frogs, owned by a whole heap of people overseas who really have no great deep association with Australia. It's just making a buck. And so I wanted to bring it back here, then heavily invest in it, and show that Australian manufacturing has got a huge future. Not everyone wants to, you know, drive a computer or get involved in AI. A whole run of Australia wants to work with their hands. Let's celebrate those people.
Yeah, I love it. And so you design everything here. We went upstairs and saw the designers, and then they all get made in Adelaide.
Yeah. And we've doubled the size of it recently. So yeah, but every pair of boots goes through like 80 pairs of Aussie hands. So that's employment, you know. That's craftsmanship, you know. And where else do you get that?
It's impressive. And the quality is great. These, I got mine on today. You got yours on?
Yeah. Well, I don't leave home without them. [laughter] So important.
It's compulsory.
Now, you got the nickname Twiggy, but the last name's Forrest. Where's the nickname come from?
Well, it's going to be hard for you to believe, but I used to be really skinny, right? And when I went to boarding school, I was like eight or nine, and I think I'd just turned nine, and they had one look at me and said, 'Ah, Forrest, you're too skinny to be a forest. You're too skinny to be a tree.'
The kids at school, were they bullying you or was it like that?
It was kind of rough and tumble, and you're way too skinny to be a tree. So you're probably skinny enough to be a twig. We're going to call you Twiggy. So that's where it came from.
And you've stuck with it.
No, I can't shake it, mate. Can't get rid of it.
Can't get rid of it. And look, who cares, you know?
But it came from, I used to have to run around in the shower to get wet, they reckon.
Yeah. So I was that skinny.
So then do you like us calling you Twiggy or is it still a bit of an insult?
Mate, that's right. I mean, you get so used to it. All my schoolmates call me that. And you know, you never change. They say Twiggy never changes. So that's all right.
Now I got a question. You're a self-made billionaire, but we see a lot of people...
Love that name. Not. Yeah.
But anyway, go ahead. You see a lot of people, you know, hustle, grind, grind. I wonder, was the process like dragging yourself through hell every day in terms of just grinding the work, or was it an enjoyable adventure?
Look, I didn't set out to make a quid. I set out to make a difference. And I say everyone who wants to make a quid, start with wanting to make a difference. You know, find a positive difference you can make in the world and go after that. And so, yeah, it was a really hard grind. I mean, yeah, when I started out on my own, it always looks easier from the outside. I mean, Fortescue, overnight success which took 25 years, right? So it's, and so many times, you know, you've got blood on your knees and you've skinned your shins and think, you know, is it really meant to be this hard? But then you come through. And so I say to everyone, I mean, determination is the name of the game. You know, if you don't ever give up, you're going to have a proper crack, you will probably get there, you know. So just don't ever give up if you've got something which is right and true. Just, you know, you'll get so many kicks in the teeth, but just keep going.
Persistence. Same thing with diving. I always say, when I started, there was a lot of divers that were way better than me. Some people more talented, but just persisting long enough. A lot of them either retired or gave up or quit, and I was able to rise through the ranks. And just the only thing besides the work ethic I noticed was the persistence, just never giving in.
Yeah. Well, I mean, those two go straight together, the work ethic and the persistence. You know, you get so many extremely intelligent people who are professorial in their academic ability, but they don't have a buck, you know, and that can be because they just didn't have the hard grind. But you see so many people who are just normal people and they've done well because they just kept going. Kept going. So that's, we have an expression which all the kids grow up with. I grew up with it, it's called NEGU. Never ever give up. Never give in. Yeah. Never give up.
Yeah. Because you find that a lot of really intelligent people, but they might not have a successful business even though they want one. You think that comes down to the work ethic?
It's determination. You know, it's to realize that you're going to learn bugger all from being successful. Where you learn is when you fail. You know, that's the lesson.
It's a harsh teacher, but you know yourself when you get a dive wrong, you know, well, kind of glad I got that dive wrong. Yeah, I might have been marked down for that, but I've learned. Don't do that again. Right. And so it's that determination to keep on going, which makes you better and better and better.
100%. And I also find after a comp that hasn't gone my way, I sit down, I really feel like I listen differently to my coach again. I'm like, what do I need to do so I can do better next time?
And that vulnerability that made you listen, out of that humility, think, look, I haven't got this by the throat at all. You know, I've still got so much to learn.
It's got me by the throat.
That's where you grow, right? It's that succeeding through failure is where you really grow.
Well, I want to dive more into it. We should get you down to the podcast set up. We've set up in your studio. So, thanks for having us.
Yeah. No, thanks for being here, mate. Love the interest.
This will be your seat there.
Beautiful. Beautiful. Beautiful.
When you've worked your way through the ranks, built your successful business, to still stay humble and stay grounded and not think you're the smartest person in the room or be open to other people's opinions, how do you stay grounded having so much success yourself?
Thank you, mate. Well, I don't see it so much as success. I see collecting a quid as just another skill. You know, it seems to be over-rewarded by society, but I see what you do as a diver, or this great podcast you do, or a brickie, or a singer, or a great fencer in the outback, and I just look at their workmanship and think, oh my god, the discipline and art which took to make that dead straight fence across the bush, or, you know, someone in entertainment, or the people who make all this great leather work and clothing around here. And I think that's such a skill, and you remember that your skill to make a buck is just another skill. So just because you might have a few more dollars than someone else doesn't make you any better. And you know, I'm surrounded by people who I love dearly who are quick to remind me, which is a really good thing. You don't want to wind up, you know, say, I don't know, let's pick an extreme example, where you're president of the United States and you invade a country and everyone's telling you how clever you are, but you haven't kept the Strait of Hormuz open. So that gets shut, and all of a sudden all that advice telling you how clever you are kind of rings hollow, you see, because now you're in a basket full of bees and the strait's closed, energy prices have gone up for all your mates around the world, including in your own country, and you're trying to dig your way out. And that's what comes from losing your humility.
I want to talk to you about that because I spoke to someone on your team, and correct me if I'm wrong, I believe for every 10 cents the diesel goes up, it costs you an extra 70 million a year.
So, how are you dealing with the inflated fuel crisis at the moment with your companies?
Look, we started drought-proofing ourselves, you know, eight years ago to say, look, let's not actually... we first had a crack at it and failed in 2013. So that's a lot longer than eight years, but about eight years ago, we started getting really serious about getting rid of diesel and fossil fuel out of our own supply chains, out of our own company. Because it's costing a few bob, right? A billion dollars a year to buy all this diesel. It goes straight offshore. You know, the price gets controlled by fruitcakes, sultans, and other nutcases who do things which then impact directly your efficiency as a company. Your ability to employ people, keep your head above water is being impacted by people who have no care for your company or your country at all. And so I just thought, what's the point of this, you know, if we can make our own energy homegrown, digger, let's do it. It's made here in Australia. So, you know, we went hard after that, and of course, we got a lot of stick. I mean...
When you say going hard, what were you doing at the time to...
Well, I went out to the workers because I didn't have a lot of friends in head office, and a lot of those people have moved on. But so I went out to the workforce and said, 'What do you reckon about we work out a way to stop importing diesel, to stop importing gas, to stop burning fossil fuel? What do you think about that?' And they said, 'Well, if you're prepared to have a crack, mate, we're really prepared to have a crack.' That workforce, you know, 20,000 plus of us, really gave me the fuel in my own tank, the energy in my own battery to keep on going, you know, because they wanted to stand for something. They wanted to make sure life's more than about making a quid. It's also about making a difference. And so whenever we ran into serious hurdles or people were explaining, listen, we're running the most successful company by shareholder returns in Australia. Don't muck with the formula. You know, we've finally got it right. Don't change it. I said, no, no, no, no, no. We didn't get here by not, you know, swimming against the tide. We got here because we swam hard against the tide. Just because we're successful now doesn't mean we're going to start rolling with the tide, be fat, dumb, and happy. We're going to keep swimming against the tide.
I guess you can't start winning and then play not to lose.
And isn't that the message to every politician around. You know, we want you to make a difference, not just to get re-elected. So, look, with Fortescue, we took that plunge, and now with energy prices being completely unstable, your fuel supply, you don't know where it's going to come from. Making all your own energy looks really smart. And I'm saying to every pollie out there, don't hinder companies which actually could change. And you're stopping companies changing from importing all their energy, competing for that energy against mums and dads when you're a huge company making multi-billion dollar profits and you've got a diesel fuel rebate. So literally taking money from mums and dads, giving it to companies which make billions in profits and saying, 'Yeah, you deserve that.' No, you don't. No, that was a bit of pork-barrelling under the John Howard era to hit all the cockies, hit all the fishermen, the ute-driving trades, all magnificent people. But what it did, that knock-on consequence was actually over-reward the big end of town to just burn diesel and not find solutions which are better, cheaper, and smarter for Australia.
And this is the diesel fuel excise. And for the people listening too, that's like the 46 cents every litre the government taxes that goes into public infrastructure, but because you guys own mines, private infrastructure, you don't use the public infrastructure, so you get rebated that. And you're asking to cap it at 50 million, which would cost you nearly 290 million a year.
Yeah. 300 plus. So, you know, so that's, I mean, these are obscene numbers, right? But you'd have to ask, you know, then you've got big multinationals like Glencore. They're getting away with kind of 400, 500 million, then BHP, then Rio Tinto, all of these huge companies, they don't need it. They absolutely don't need it. They argue they do because they're kind of on this drip feed now. I don't want to let go of this teat. It's, you know, it's...
Because they wouldn't want to cut half a billion worth of profits.
Yeah. But you know, they actually don't need it. And in a time of crisis like now, this is the time when we've got to say to all our politicians, I don't care if you're Hanson or Albanese. I couldn't care less who you are. But if you're standing in the road of Australia's growth by saying the diesel fuel rebate is a good idea for companies who make over 50 million bucks a year, let me spell that out, 50 million, you don't really need a handout. That's a year. That's not over decades. That's a year. Well, if you're doing that, you don't really need a handout from the working punters out there in Struggle Street. You just don't need it. You should be giving it back or should not be getting it in the first place.
Because a lot of Australians too are upset that offshore gas gets taxed less than the beer excise, and that people aren't happy that they're getting away with not paying a lot of tax. You're saying they're also getting away with not paying, or they're getting rebates on their diesel. What would you recommend they do?
Yeah, look, I'd just say to everyone who defends the gas industry, and there's plenty out there, say, you know, I happen to be pretty well versed on sovereign risk, right? I've built companies on sovereign risk. So I don't want to cop any lectures from politicians who haven't been out there in the real world of global, you know, rugby scrum politics and business to not know about sovereign risk. But I can say this, no punter out there in the world is going to say that this little Aussie battler, little startup company, Fortescue, should pay more tax each year than the entire global foreign gas industry does a year. They are companies which each one of them, there's dozens of them, each one of them dwarf the size of Fortescue, a homegrown Australian company proud to pay its fair share of tax. I pay more as Fortescue than all those companies combined, and each one of them is bigger than us. So how is that a fair cop? You can defend it and say, oh mate, you can't change the rules because of sovereign risk. Well, I've got to say...
And what is sovereign risk for...
Sovereign risk is when a government changes the rules midstream on, say, things like tax.
Because they say it affects investment into the country because then people aren't sure what they're investing in because people change the rules on them.
Yeah. And I've just got to say what's happened is that those companies have changed the rules. When you inflate the cost of your project and then charge yourself interest on that inflated number, then that interest is always going to make sure you don't pay tax. But who you're paying interest to, you're paying to yourself. So it's artificially got your taxable income down to next to nothing, you know, and that to me is wild, you know. I just look at it from the outside world and they think Australia's a free kick. We're not going to pay any more tax than we have to because that's their laws. So suck it up, Australia. We're going to get away with it. Or big tech. You know, I've got a lot of mates in big tech. You know, we do a lot of business with big tech, but they're not paying tax here because of how the rules work. So all I'm saying is to the big end of town, if I am paying more tax than you big tech or than you global foreign gas industry as one company, made in Australia company, we're paying more than all of you combined. Digger, how's that fair?
And as a sovereign investor looking in, you can say, 'Nah, that's not fair, mate. That's not fair.' So you wouldn't be surprised if they say, 'Well, we changed the rules on the Australian taxpayer, so we don't mind if the Australian taxpayer changes the rules on us a little and makes us cough up a bit of tax when we're making super profits.'
You know, when they say, you know, a big company proclaims it's paying 240 or 30 million a year in a year where Fortescue paid...
In taxes and royalties and all going straight back to the punters. And, you know, I'm saying, well, justify that all you like, politician, but that's clearly not fair to the man on the street. It's not a level playing field. And then rub a bit of salt in the wound and pay the diesel producers overseas to bring in more diesel to actually make life more expensive for the punters because you're giving a free kick back to the biggest consumers of that diesel. And that free kick is coming from a rebate which the punters don't get.
Because the argument goes this stopped happening 15, 20 years ago, that, oh no, no, the diesel fuel rebate goes into roads and goes into infrastructure. That stopped happening decades ago, maybe.
So it's not even going into public, it just goes straight into international revenue. So that's a, that's a fallacy, that's rubbish. So I'm saying, well, for all the farmers, the fishermen, people who are my mates, people who I know super well, if you're making over 50 million a year, you probably don't need a handout from mums and dads, right? I'd cut it off at 50 million.
Don't get it. Now, people say to me, 'Well, you just shouldn't claim it, Twiggy.' Well, isn't that easy for you? That would be straight against my shareholder's interest. It'd probably be illegal, you know, and wind me up in trouble if I just refused to receive it.
Plus, everyone's got to play by the same rules. You know, you start competing in a competition and they can do seven dives and I can do six.
It doesn't matter how good you are.
It's not fair, right? It's simply not fair.
It's got to be a fair game for sure.
You've nailed it.
Now, you're trying to wean your companies off diesel entirely. You want to stop using, I think, a billion litres a year. What's your plan to do it? Is it electric? Is it green hydrogen? What's your plan?
Yeah. So it'll be a blend of that, but it'll be solar, wind, and batteries. We'll probably top up with hydrogen, ammonia, particularly for shipping. But, you know, the cost of batteries around the world, we've invested well over a billion dollars in battery technology. So we know batteries like the back of our hand, but the cost of batteries have come down while the efficiency of batteries has gone up so much that if you can turn renewable energy, solar and wind, which is only useful when there's wind and sun, but because of batteries, you can store that energy and turn it into almost 24/7 baseload power. That means you're now competing against oil and gas, but with an energy you've made right here in Australia, you know, homegrown, Australian-made. What the bloody hell is wrong with that, mate?
It'd be great. It'd be great. And Chris Bowen's investing heavily in wind power, solar, hydro, batteries. Do you think he's doing a good job?
Look, I think he's out there batting. But I think there's a big fossil fuel lobby which is pushing against him. Every time you get encouraged to go green, you're called woke and on and on. So I just bring it straight back to an economic argument so I can avoid all these woke accusations and...
Yeah. You're a hard lefty, Twiggy, and blah blah all that crap.
Tell us the numbers, Twiggy.
Well, yeah. Just say, let's just compare my company to yours, mate. I mean, who has the greatest shareholder returns in this country in history? It's not yours, Digger. It's Fortescue.
Is that right? Does your company have the greatest returns on shareholder returns in Australian history?
In Australian history. So when I get served up this woke argument or you're a hard lefty, Twiggy, and all that crap, I said, 'Well, let's go hard. Look at the numbers.'
