Speaker 1: This is Tom Rowlands Reese and you're listening to Switched
Speaker 1: on the BNF podcast, and today we bring you an
Speaker 1: interview from our BNF Summit Shanghai, which took place on
Speaker 1: the third and fourth of December. On stage Bloomberg Enief's
Speaker 1: Head of Australia Research, Lenard Quong, was joined by one
Speaker 1: of the most recognizable names in metals, mining and now
Speaker 1: green molecules, the founder and executive chairman of Fortescue, Dr
Speaker 1: Andrew Forrest. Clean energy and low carbon tech requires the
Speaker 1: metals and minerals that companies like for Toscu provide, but
Speaker 1: major miners are finding that their net zero ambitions are
Speaker 1: under pressure from shareholders seeking to maximize returns. Nevertheless, for
Speaker 1: Toscu has positioned itself to be both a global metals
Speaker 1: and green energy company. By twenty thirty, they aim to
Speaker 1: have their Australian iron ore operations running on green energy,
Speaker 1: and more importantly, they are looking to achieve this with
Speaker 1: real zero terrestrial emissions for Scope one and two, while
Speaker 1: holding a net zero Scope three target by twenty forty.
Speaker 1: Doctor Forrest discusses how he intends to see these goals
Speaker 1: come to fruition, while also taking time to discuss it's
Speaker 1: the economic viability of green hydrogen in a CCS world,
Speaker 1: and his opinions on global tariffs. Now, let's hear from
Speaker 1: Lenny's interview with Dr Andrew.
Speaker 2: Forrest Nay, Doctor Forest, and welcome to our tenth Bloomberg
Speaker 2: ne EF Shanghai Summit. It is our pleasure to have
Speaker 2: you here with us today and this is a conversation
Speaker 2: I've been looking forward to for quite some time, and
Speaker 2: I figured what better way to do it than to
Speaker 2: meet seven thousand kilometers from home in front of seven
Speaker 2: hundred of my closest friends.
Speaker 3: Now, I think most people in this.
Speaker 2: Room will know you from your work with Fortescue, where
Speaker 2: you're a founder executive chairman. You've been operating the company
Speaker 2: for over twenty years now, congratulations on your anniversary last year,
Speaker 2: and over that time you've grown Fortescue into the world's
Speaker 2: fourth largest iron ore company, shipping over one hundred and
Speaker 2: ninety million tons of product last year and over that period,
Speaker 2: I think Forest has been the highest returning company on
Speaker 2: the Australian Stock Exchange and an incredible feat.
Speaker 3: But an introduction of you.
Speaker 2: As an Australian iron or magnate just seems manifestly inadequate
Speaker 2: because your company, your portfolio of organizations, you're operational in
Speaker 2: almost every continent in the world, across a wide variety
Speaker 2: of commodities and products. On a personal level, you're a philanthropist,
Speaker 2: you have a doctorate in marine science. You're a climate warrior,
Speaker 2: a green energy pioneer, a green hydrogen evangelical. You're a jackaroo,
Speaker 2: son of a jackaroo from a foul, proud family of jaqueline.
Speaker 4: Say what that is?
Speaker 3: That's an Australian jokes.
Speaker 2: Apologies to the translators for that one, but we can
Speaker 2: google it later on. But amongst all of the long,
Speaker 2: long list of accolades, perhaps rarest of all, at least
Speaker 2: in my eyes, is you're a believer in real zero.
Speaker 2: And that's where I'd love to start today's conversation. Could
Speaker 2: you tell me what is real zero?
Speaker 3: How does it.
Speaker 2: Differ from the more conventional I guess you could say
Speaker 2: net zero?
Speaker 3: And why is that the right target for you and
Speaker 3: for for toescue?
Speaker 4: Okay, so let's start with a solution, the.
Speaker 5: Solution to global warming and climate change for all future generations,
Speaker 5: but particular poisoning, atmospheric poisoning for citizens today is the
Speaker 5: ability to stop burning fossil fuel. If you stop burning
Speaker 5: fossil fuel, then you gather up everything else like agricultural emissions, etc.
Speaker 5: You make sure the perfect doesn't get in the road.
Speaker 5: Is the very, very good, and it is an economically
Speaker 5: attractive opportunity for every company in the world. It say, Okay,
Speaker 5: i'll invest the capital to build out my own green
Speaker 5: energy system. It'll have a lump of capital upfront, but
Speaker 5: from that point on you'll be saving money every year
Speaker 5: from not buying fossil fuel, which in Fortescu's case is
Speaker 5: one third of our.
Speaker 4: Operating cost, which is billions.
Speaker 5: And so from that point on we're saving around of
Speaker 5: billion dollars a year on a six billion dollar investment, and.
Speaker 4: We save it forever.
Speaker 5: So it is a very economic proposition to stop burning
Speaker 5: fossil fuel. Invest in the equipment you need to do that,
Speaker 5: amortize it or repay it over ten fifteen years as
Speaker 5: you like, and you'll find you've created a lot of
Speaker 5: value for shareholders. Also doing the right thing by your
Speaker 5: kids and by your fellow citizens.
Speaker 2: This is a question within that in historically many have
Speaker 2: found as a chairman, a board, an executive and certainly
Speaker 2: as a representative of shareholders, the main priority needs to
Speaker 2: be those returns.
Speaker 3: It needs to be the performance of the company.
Speaker 2: And some might find that could come in the absence
Speaker 2: of doing the right thing for your kids.
Speaker 3: As you just said, it sounds like you found a way,
Speaker 3: and in fact it is the right way to wed
Speaker 3: those together. You need to do the right thing.
Speaker 2: You need to deliver on this decarbonization from a company perspective.
Speaker 3: What was that process like for.
Speaker 2: You, And perhaps there's advice for those in the room
Speaker 2: who might want to mirror that level of ambition. How
Speaker 2: did you convince those stakeholders that this was the right target.
Speaker 4: Okay, so there's two things to play here.
Speaker 5: One is the absolute certainte of global warming, and that
Speaker 5: when there is mass death and I'm afraid to say
Speaker 5: that we've had mass death cumulatively from the impact of
Speaker 5: humidity on populations who cannot get air conditioning, or extreme floods, fires,
Speaker 5: et cetera. That the atmosphere is supercharged with moisture and
Speaker 5: it's hot, and that is of course because of the
Speaker 5: accelerating heat in the atmosphere. But the bigger question is
Speaker 5: that the planetary boundaries which absorb carb and go oxside,
Speaker 5: ocean's land, anything you like. They're starting to reach saturation
Speaker 5: point at exactly the same time that fossil fuel emissions
Speaker 5: are going at the opposite direction, accelerating at an accelerating rate.
Speaker 5: So you know for certain that governments are going to
Speaker 5: move on this. They're not going to watch their citizens
Speaker 5: get savagely harmed just because our company's got more lobbyists
Speaker 5: than someone else. Eventually it'll come down to the people
Speaker 5: and they'll change governments or they'll change policy. So that
Speaker 5: certainly is with us, but even more certain for a
Speaker 5: chief executive, and we can be pretty short sighted, not
Speaker 5: only more short sighted out there's probably a politician.
Speaker 4: That's a joke of my political friends.
Speaker 5: But the certainty of the economics of going fully green
Speaker 5: is obvious now.
Speaker 4: The fact that we can build out our systems.
Speaker 5: Companies in China can build out their systems and save money,
Speaker 5: deliver their shareholders, their citizens a low cost and predictable
Speaker 5: form of energy. And this has really macro implications. If
Speaker 5: you look at the pre eminence of China's economy centuries
Speaker 5: ago on a global basis and the rise of other powers,
Speaker 5: including North America, and you look now out of North
Speaker 5: America as the largest economy in the world for now
Speaker 5: staring straight down the barrel of going back to fossil fuel. Now,
Speaker 5: that's going to peg their economy to what some oligarch
Speaker 5: or despot or some country who happen to be born just.
Speaker 4: By luck on top of an oil deposit.
Speaker 5: They're going to peg the prices of energy in North
Speaker 5: America to the consumer and to the big investors like me.
Speaker 5: So if I'm looking at a five or six or seven
Speaker 5: billion dollar project in North America and it's pegged to
Speaker 5: fossil fuel pricing, and I have to compete around the world,
Speaker 5: then I know that some oligarch or despots some other
Speaker 5: place in the world could jack up my energy prices
Speaker 5: and put it risk that project and the potentially tens
Speaker 5: of thousands of people I employ just because of that policy.
Speaker 5: On the other hand, those countries going into renewable energy,
Speaker 5: I can invest in much more safely because I can
Speaker 5: see those energy costs both stable and declining over time.
Speaker 5: And this is a great truth. This will speed the transition.
Speaker 5: That historic transition which has not happened for centuries, likely
Speaker 5: to happen comfortably in our generation as one big economic power.
Speaker 5: China goes renewable energy, tracks investment from all over the
Speaker 5: world despite tariffs and etc.
Speaker 2: Etc.
Speaker 4: And countries who stick to fossil fuel, they.
Speaker 5: Will slide back and you'll see this economic transition, but
Speaker 5: it's also a social transition. I have used liberally a
Speaker 5: colorful description of the fossil fuel sector desk spots, oligarchs.
Speaker 4: Countries happen to be like enough to be born on
Speaker 4: top of an all deposit.
Speaker 5: Their authority, which is paramount now, the biggest, most profitable
Speaker 5: industry in human history. Paramount now is quickly being eroded.
Speaker 5: The power is going to renewable energy, and that's households,
Speaker 5: that's companies, that's even governments. They're going to be in
Speaker 5: charge of their own energy. And these take a while
Speaker 5: to build out. You can have a sugar hit with AI,
Speaker 5: you can have a sugar hit with big tech. They're
Speaker 5: going to come and go, and that technology will be
Speaker 5: transferable around the world within a couple of years. But
Speaker 5: building out an energy platform for your economy that takes
Speaker 5: years and decades, and if you're not doing it, you're
Speaker 5: going to come badly second.
Speaker 2: And sounds like there's real opportunity that democratization of energy
Speaker 2: that comes from that clean power evolution that we're seeing.
Speaker 3: I'd love to come back to the question of where you're.
Speaker 2: Seeing the advantages in different markets, particularly here in China.
Speaker 2: But one of the technologies that you have been principally
Speaker 2: behind and supportive is green renewable hydrogen, and that's really,
Speaker 2: in many ways, the step that comes after having that
Speaker 2: abundance of clean, low carbon, low cost power available.
Speaker 3: To you in the market.
Speaker 2: What is it in your eyes that makes green hydrogen
Speaker 2: particularly such a key technology for decarbonization, even in the
Speaker 2: absence of some of the other talted solutions like carbon
Speaker 2: capture and storage. What about it is makes it the winner?
Speaker 4: Well, capture storage is not a solution.
Speaker 5: It's a technical lie waiting for the next idiot to
Speaker 5: come along to believe it. And that's why companies get
Speaker 5: tax payers to pay for it, because they basically know
Speaker 5: it's likely to fail. It does fail nineteen out of
Speaker 5: twenty times. As a statistician, that's failed. So what you
Speaker 5: know does work is renewable energy and green hydrogen is
Speaker 5: if you look at the technology curve of any of
Speaker 5: these great emerging industries, they start like that.
Speaker 4: Now onil and gas is up here.
Speaker 5: It's had that huge run er, horizontal drilling, everything you like,
Speaker 5: better technology, but it's plattered out green. Hydrogen is just here.
Speaker 5: And of course within a snapshot of time, people say, oh,
Speaker 5: well it's too expensive, everyone's gone. Don't you realize this
Speaker 5: war and Ukraine, there's a war in the Middle East.
Speaker 5: I mean, oh my god, we've got to stick to
Speaker 5: what we know. That's actually the time to change, and
Speaker 5: this change is upon us. We're now looking at making
Speaker 5: hydrogen as fortescut a fraction of what we were a fraction.
Speaker 5: And when people say, oh, Twiggi's getting out of hygien
Speaker 5: or he's lost his fam they just don't know me
Speaker 5: where at the start of this curve, ladies and gentlemen.
Speaker 4: And it's going to go like that. Be assured it
Speaker 4: will follow.
Speaker 5: History, and hydrogen costs will come down, I think eventually
Speaker 5: to the price of transportable LNG, and then there'll be
Speaker 5: just no reason whatsoever for any government to encourage their
Speaker 5: citizens to consume an energy which is going to destroy them,
Speaker 5: which is pumping particularly poisoning into the air today, affecting
Speaker 5: their health this afternoon, and their children's future forever when
Speaker 5: they could switch to green hydrogen, that excuse will not
Speaker 5: be there. So I'm really looking forward to that time
Speaker 5: that I can ask to see if they'll see me
Speaker 5: the leadership of the great let's say the great cities
Speaker 5: of China, which suffers steel mills around them, particular poisoning,
Speaker 5: and say the technology is there super powerful charging six
Speaker 5: thousand killer wats an hour, where's the standard is about
Speaker 5: three to five hundred. Is there charging these huge machines
Speaker 5: like our trucks inside thirty minutes?
Speaker 4: Is there charging a family.
Speaker 5: In twenty five seconds that's what we're doing on the
Speaker 5: racing circuit, ladies and gentlemen right now. Is there making
Speaker 5: hydrogen as cheap as commercial energy is coming? And so
Speaker 5: I just advise this all, particularly governments, don't be on
Speaker 5: the wrong side of history.
Speaker 4: You'll be found wanting.
Speaker 2: I mean, you've highlighted the Chinese market in particular, and
Speaker 2: it's something that you've been involved in for quite some time,
Speaker 2: whether it's investments and partnerships. I think you recently announced
Speaker 2: a four hundred million dollar deal with XMGC. If I
Speaker 2: remember rightly, for many of the clean transport components that
Speaker 2: your mind sights will need that. Over the twenty years
Speaker 2: that Fortescue has been in business, you've been operating here
Speaker 2: in China for all of that time, effectively, can I
Speaker 2: ask you on your views that how have the demands,
Speaker 2: how the needs of Chinese customers changed over that period
Speaker 2: and perhaps more pointedly here in twenty twenty four nearly
Speaker 2: twenty twenty five, is the market ready for the green
Speaker 2: iron revolution?
Speaker 3: That's stick, That is now the time.
Speaker 5: So this is the beauty of free trade amongst nations.
Speaker 5: And if you put barriers around your nation, like big tariffs,
Speaker 5: it's a sugar hit, but in the end of your
Speaker 5: country is going to become best competitive. Example, we purchased
Speaker 5: billions of dollars right now of zero pollution equipment from
Speaker 5: China and Europe white because China and Europe have settings
Speaker 5: for their industries to go green, and so their companies
Speaker 5: are going green and we can buy that equipment.
Speaker 4: One thing which Australia can.
Speaker 5: Lead in because it just so happens to have the
Speaker 5: highest radiance on top of the best huge deposits of
Speaker 5: iron ore, so you've got energy and the molecule together.
Speaker 5: That is a walk up start to make green iron metal.
Speaker 5: We're doing green iron ore, and it'll be done by
Speaker 5: this decade comfortably. But green iron met should also be
Speaker 5: done by this decade company, and that means that we
Speaker 5: can combine that historically high energy which is on.
Speaker 4: Top of these very.
Speaker 5: Very large iron or deposits together make green iron metal.
Speaker 5: That's where ninety eight percent of the pollution which comes
Speaker 5: from steel mills around China, India, wherever you like, comes from,
Speaker 5: is from the conversion of iron ore to iron metal.
Speaker 4: After that, it's just steel. It's like making a cake.
Speaker 5: You put a bit of cobal to lithium or antimony
Speaker 5: or this or that. There's fourteen thousand types of stainless
Speaker 5: and real steel, but it all relies on this ninety
Speaker 5: eight percent, which is very polluting.
Speaker 4: Now, if we can kill that pollution off.
Speaker 5: In Australia ship it to those countries which have huge
Speaker 5: populations where the populations are suffering from that pollution, then
Speaker 5: it's a wind wind for China, it's a wind wind
Speaker 5: for Australia, and it's bringing our technologies and our management
Speaker 5: skills together in partnership.
Speaker 4: It is, I think a union which must happen for
Speaker 4: the good of the world.
Speaker 2: And it represents no small disruption to establish trade dynamics
Speaker 2: that we've built out for decades across the world. But
Speaker 2: to delve into the question of green hydrogen, I mean,
Speaker 2: and you've highlighted that people who doubt that you're getting
Speaker 2: out of the game don't know you. We look at
Speaker 2: green hydrogen quite extensively. In our forecast to net zero,
Speaker 2: we found that the world could be producing and consuming
Speaker 2: about three hundred and fifty million tons of.
Speaker 3: It by the year twenty fifty to stay on that trajectory.
Speaker 2: But that isn't to say that right now the industry
Speaker 2: isn't having its problems.
Speaker 3: And even at Fortescu, a big.
Speaker 2: Proponent, you have pushed out delayed your fifteen million production
Speaker 2: target of renewable hydrogen beyond twenty thirty.
Speaker 3: The question, really, though, is what is the missing.
Speaker 2: Piece of the puzzle right now that's preventing hydrogen scaling
Speaker 2: up in the way that it can that perhaps it
Speaker 2: should in order for us to get these green products
Speaker 2: that the world, as you say, needs.
Speaker 3: What's missing?
Speaker 4: Okay?
Speaker 5: So it's a great question. Often with these global complex riddles,
Speaker 5: the solution is right in front of you and you
Speaker 5: just miss it. I look at the energy around the
Speaker 5: world diesel LNG et cetera.
Speaker 4: They're not pure.
Speaker 5: LNG is ninety five percent methane and the rest is
Speaker 5: rubbish ethane, et cetera. Why do we produce hydrogen where
Speaker 5: it's one hundred only that molecule it's so pure, pure
Speaker 5: in the driven snow. Why do we have this massively
Speaker 5: powerful energy locked up in this glass? And when we
Speaker 5: split the oxygen from the hydrogen, it's pure hydphen We
Speaker 5: just release the oxygen.
Speaker 4: It's expensive when you wind back from that thing. Well,
Speaker 4: does it have to be pure?
Speaker 5: What if the impurity is, say, like pure oxygen, which
Speaker 5: is not difficult because that's where this.
Speaker 4: Comes from, hydron oxygen.
Speaker 5: If you can tolerate that impurity, which is fine for
Speaker 5: the environment when you burn it, then you can make
Speaker 5: hydrogen and a fraction of the cost. And that's what we've
Speaker 5: started to do. And it is hydrogen an oxygen pure
Speaker 5: with those elements, but it's not pure hydrohen you. We
Speaker 5: don't need it to run our turbines, run a run
Speaker 5: our hydrogen turbines. We don't need that. We don't need
Speaker 5: it to make ammonia to run our ships, to run
Speaker 5: our trucks, to run our trains. These are all technologies,
Speaker 5: these in gentlemen, which are replicable around the world, not.
Speaker 4: Just with Fortescue, but everywhere.
Speaker 5: And I'm really excited by the fact that the answer
Speaker 5: was always in front of us, and now we're going
Speaker 5: to hit it.
Speaker 2: It reminds me so much of conversations we were having
Speaker 2: a bit over ten years ago here in China as
Speaker 2: the polysilicon production industry moved from the nine end standard
Speaker 2: for microchips into what became a world leading, world beating
Speaker 2: forduction of silicon four solar panels, And it was that
Speaker 2: conversation of how huge do you need it, how expensive.
Speaker 3: Does it have to be that was sort of holding
Speaker 3: you back.
Speaker 2: I would love to delve into that for hours on
Speaker 2: end with you, to pick your brains for longer, but
Speaker 2: unfortunately we are running out of time. I did have
Speaker 2: one final question for you. A few months ago, you
Speaker 2: sat down with some of my colleagues to talk about
Speaker 2: the ambitions of Fortescue, and you left them with a challenge.
Speaker 2: You said to them, the next person who sits in
Speaker 2: this seat, ask them when are you going to stop
Speaker 2: burning fossil fuels? And you say, say by twenty thirty,
Speaker 2: give them a big hug. Now, I don't know, but
Speaker 2: I think we have rules against hugging guests on stage, but.
Speaker 3: I don't know if that's true for the audience. So
Speaker 3: is that a challenge you'd like to put to the
Speaker 3: audience here today?
Speaker 2: In your discussions, ask the people you meet, when do
Speaker 2: you plan on stop building burning fossil fuels?
Speaker 5: Okay, so thank you. That's a great question. So real
Speaker 5: zero is simply stopping burning foss fuel. Don't worry about
Speaker 5: carbon sigustration, set off offsets, carbon credits, all that rubbit.
Speaker 4: It's all a smoke screen.
Speaker 5: You've got temperatures going through the roof, net zero twenty.
Speaker 4: Fifty there just has too many excuses in it.
Speaker 5: But if you just stop burning fossil fuel, you go
Speaker 5: real zero, then it's economic for your shareholders. I mean,
Speaker 5: Forest US not the highest performing company on Australian stugs
Speaker 5: change history. Because we may make bad economic decisions, we
Speaker 5: make good ones. It's economic to stop burning fossil fuel.
Speaker 5: So I challenge every company in China with this question,
Speaker 5: when are you going to stop burning fossil fuels?
Speaker 4: And the answer will be when I.
Speaker 5: Fall in love with my shareholders, when I fall in
Speaker 5: love with my employees, and I act for them because
Speaker 5: that's when I'll peg a date or stop burning fossil
Speaker 5: fuel by this date. And I say to the entire world,
Speaker 5: real zero, stopping burning fossil fueled by twenty forty is economic.
Speaker 5: It's great for your citizens now, it's great for your
Speaker 5: kids tomorrow, and it will head off global war real sorry,
Speaker 5: by twenty forty. Lightest is the challenge.
Speaker 3: Doctor Forrest, always a pleasure. Please join me in. Thank you,
Speaker 3: Doctor Forest for join us today.
Speaker 4: Thank you.
Speaker 5: Today's episode of Switched On was produced by Cam Gray
Speaker 5: with production assistance from Kamala Shelling. Bloomberg NIF is a
Speaker 5: service provided by Bloomberg Finance LP and its affiliates.
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