ANALYSIS: Fortescue Metals Group has never been like other big, listed companies and its leadership succession is no exception.
Those of us with long memories recall that Fortescue was denigrated from the start.
Its competitors said it would never succeed with its ambitious plan to become the ‘third force’ in iron ore in the Pilbara, but Fortescue proved them wrong.
It has proceeded to become an extremely successful and highly profitable iron ore producer, often rated as the most efficient in the Pilbara.
The dominating presence at the company continues to be its founder, chairman and major shareholder Andrew Forrest, who retains a 36 per cent stake.
Mr Forrest spends a lot of time pursuing his many other interests and delegates a lot of authority to deputy chair Mark Barnaba, but like most company founders who set the culture, his influence is ever present.
Fortescue has a history of setting extraordinarily ambitious stretch targets, and regularly surprises the market by hitting them.
So when Mr Forrest started talking last year about turning Fortescue into a green energy powerhouse, the market needed to take him seriously.
The company took that narrative a step further today, describing itself as a vertically integrated green energy and resources group.
That transition provided the backdrop for today’s surprise announcement that Fortescue planned to seek a new chief executive.
Incumbent Elizabeth Gaines isn’t leaving, a point she emphasised at a press conference in Sydney.
“I don’t see this as a departure of any shape or form,” she said.
“This is just the opportune time, Fortescue is genuinely transitioning.”
Ms Gaines will be closely involved in selecting her successor – a rare thing at a big-listed company.
After the succession, she will become a non-executive director and the company’s global green hydrogen brand ambassador.
The ambassador role confirms Ms Gaines is a true believer in Mr Forrest’s vision for the company.
That was evident at today’s press conference, where both Mr Forrest and Ms Gaines were emotional as they professed their admiration for each other and the company.
In keeping with his extravagant style, Mr Forrest set the bar very high when describing the new role.
Ms Gaines has the critical role of “ensuring the world understands” that green hydrogen, green ammonia and green energy are the only practical and commercially sustainable solution to global warming.
Ms Gaines’ two new roles will mark another step in her most unusual career path.
She originally joined Fortescue as a non-executive director, then became chief financial officer before succeeding Nev Power as chief executive four years ago.
The brief for the new chief executive reflects Fortescue’s transition – the company said it wanted to hear from people with global experience across heavy industry, manufacturing, and renewable energy.
No mention of mining.
Ms Gaines said the new chief executive should be someone who is “innovative, who likes to push boundaries, who sees opportunity rather than challenges”.
That certainly fits with the Fortescue culture and Mr Forrest’s way of thinking.
“This is a once-in-a-lifetime opportunity,” she added.
“This is not someone coming in to fix it. This is somebody coming in with this enormous portfolio of opportunities to continue to grow and lead Fortescue.”
Mr Forrest and Ms Gaines emphasised today that Fortescue should no longer be thought of as a mining company with a green energy subsidiary, Fortescue Future Industries.
Instead, they emphasised that the green energy initiatives were integral to decarbonising the company’s iron ore operations.
Fortescue is certainly not alone in needing to decarbonise.
But like everything the company does, it is pursuing this goal more aggressively than anyone else in the market.
Fortescue has already agreed to invest 10 per cent of its net profit after tax in green energy initiatives.
Based on last year’s profit, that would equate to nearly $1.4 billion per year.
Its rapid pursuit of these opportunities is evidenced by Fortescue Future Industries recruiting 700 people at last count.
For hard-nosed financial analysts, this diversion of money into new ventures with no immediate prospect of financial returns is seen as a negative.
To the contrary, the company indicated today the new strategy was a winner, saying the number of shareholders had grown exponentially since FFI was announced.
That indicates no let up in Fortescue’s ambitious transformation.
