Forrest to Take Over as Fortescue Chairman, Relinquish CEO Role to Power
Andrew Forrest, the billionaire founder of Fortescue Metals Group Ltd. (FMG), will retire as chief executive officer of Australia’s third-largest iron ore exporter to take over as chairman.
Chief Operating Officer Nev Power, who joined the company this year, will replace Forrest, 49, on July 18, with Forrest becoming chairman at the board meeting on Aug. 18, Perth-based Fortescue said today in a statement.
Forrest, Australia’s third-richest person, said he will concentrate on philanthropy after retiring as CEO of the company he founded in 2003. Power, who takes charge of the company’s $8.4 billion planned expansion to almost triple output, said today said it will achieve this target a year ahead of schedule.
“Moves have been afoot to bolster the senior management on the board of Fortescue over the past 18 months,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. “This is just probably the completion of that move in terms of making the company more autonomous and reduce Andrew Forrest’s day-to-day activities.”
Fortescue shares gained 2.6 percent to A$6.69 at the 4:10 p.m. close of trading in Sydney, taking gains for the past year to 66 percent as iron ore prices climbed. The benchmark S&P/ASX 200 Index, down 0.2 percent today, has risen 6.7 percent in the past year.
Forrest, known as “Twiggy”, owns 31 percent of the company that’s now worth more than A$20 billion ($22 billion). He was third on BRW magazine’s annual list of Australia’s 200 wealthiest people, released May 25, with his fortune valued at A$6.8 billion, a 46 percent increase from last year.
Fortescue and Forrest are appealing a court decision in February that found they had misled investors over accords with China for the development of the company’s initial iron ore project. Both denied the allegations brought by the nation’s corporate regulator. Forrest faces possible penalties, including being barred as a director and paying a fine.
The case had no bearing on his retirement and he was confident the company will win the appeal, Forrest said today at a press conference. He said he may dilute his shareholding to fund his philanthropic efforts, which will concentrate on improving employment for Australia’s indigenous population.
Today’s leadership change “positions the company a lot better, irrespective of the outcome of legal issues surrounding Andrew Forrest, which is prudent from a shareholder’s perspective,” Schroeders said by telephone from Melbourne.
Fortescue last year outlined plans to expand production to 155 million metric tons of annual output by fiscal 2014 from 40 million tons through development of Solomon and the Western Hubs in the Pilbara region of Western Australia. The company will now reach the 155 million ton total in 2013, Power said.
The company began looking for a replacement CEO almost three years ago on Forrest’s advice, the company said. Power, the former chief executive officer of mining and building contractor Thiess Pty, was appointed in January, the company said. A formal global search was conducted over the past year, it said.
In March, Power told reporters in Perth he had been hired to strengthen management, not to ultimately replace Forrest, and he saw no change in Forrest’s role.
“Fortescue is now recognized for its ability to deliver on its targets and, with Nev’s extensive experience and knowledge available to lead the company, this is a perfect time for me to move away from my day-to-day, hands-on role,” Forrest said in the statement.
The great nephew of Baron John Forrest, the first premier of Western Australia state, Forrest grew up on a remote cattle ranch where he did his early schooling via short-wave radio.
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