Delivering on our strategy

Jul 9, 2019

Fortescue is a proud West Australian company.

When Fortescue was founded by our Chairman, Andrew Forrest AO, we had a vision to meet the iron ore supply gap in China.

In just over 11 years we’ve delivered more than 1.1 billion tonnes of iron ore to customers and have been widely recognised as the world’s lowest cost producer of seaborne iron ore to China.

We employ directly and indirectly close to 10,000 people and of our direct employees, over 95 per cent are based here in WA. Almost 20% of our workforce are female and over 12% of our direct employees are Aboriginal, making us one of the largest employees of Aboriginal people in Australia.

Fortescue has a proud track record of safely and successfully developing and operating iron ore projects in the Pilbara having built, or commenced building, five iron ore mines in less than 15 years. In the past 18 months we have also announced two significant new investments: Eliwana and Iron Bridge with a total investment here in WA of A$5.5 billion.

These projects are important to Fortescue and our State, creating up to 5,000 new jobs during construction and 1,400 full time site positions once operational, not to mention the additional flow of benefits to our communities, the State and the National economy.

Together, Iron Bridge and Eliwana will build on our development and construction capability and demonstrate the industry-leading innovation and energy efficiency of a modern iron ore mine. 

Against a backdrop of an iron price of above US$120 a tonne – which none of us would have predicted six months ago – China’s steel industry continues to outperform expectations with some predicting that annual steel production could reach 1 billion tonnes this year.

An important factor in Fortescue’s journey has been our longstanding relationships, and the strength of our

multifaceted engagement with China.

This engagement extends across Chinese investors, financing arrangements with Chinese banks, over US$1 billion of procurement as well as strong social, academic and policy engagement.

All of these relationships, across Government, business and society, contribute to fostering a depth and breadth of understanding that is crucial to our business and our country’s success.

WA is Australia’s gateway to Asia. Perth is situated in the world’s most populous time zone and our region is shared with approximately 60 per cent of the world’s population. We have used this position to our advantage.

Often the East Coast view dominates discussion about Australia’s relationship with China and Asia more broadly. This does not fairly reflect WA’s important, multidimensional relationship with China. China has been WA’s largest market for exports since 2006 and, of course, Western Australia is the largest source of iron ore for China.

We need to ensure that the narrative about Australia’s relationship with China reflects the experience of WA and its resources sector and is not driven solely by the East Coast perspective.

The long-term vision of our Chairman continues to thrive at Fortescue and is reflected by our US$100 million investment in exploration in FY19.

We are attracted to the opportunities that will come through the inevitable growth in electric vehicles and the demand for battery materials, exploring for copper and lithium in WA as well as early stage exploration in Ecuador and Argentina on targets prospective for copper.

Let’s also remember that innovation is at the heart and soul of WA.

In medicine, we have Prof Fiona Wood’s patented spray-on skin technique.

In science, WA will be home to the square kilometre array, one of only two international host sites building the world’s largest radio telescope.

And mining is at the forefront of technology, leading in autonomous haulage as well as energy, processing and data analytics.

These are just a few examples of innovation delivering opportunities for WA and the Australian economy through investment, jobs of the future, business opportunities and community development.

As West Australians, we must all be strong advocates for our State – and the message that the resources sector will continue to drive our economy for decades to come.

We comprise just 10% of Australia’s population but our State is the power engine for Australia’s economy, accounting for 35% of Australian exports in FY18.

The recent GST outcome was a good result for WA – not before time – and the State Government is to be congratulated for its determination to translate this and the strength of our natural resources into the strongest foundation for the future.

Our State’s return to budget surplus for the first time in five years is an outcome of which we can all be

proud.

In WA there are now approximately $113 billion of projects underway or in the pipeline, including our own Eliwana and Iron Bridge projects.

This has led many to comment that WA is experiencing, or about to experience, another “boom”.

At Fortescue, we don’t subscribe to the “boom/bust” theory as that assumes that after every so-called boom there will inevitably be a bust.

Rather, we believe we are at the start of another construction phase that will sustain investments and support ongoing operations.

We need to attract talented people to our State, build our skills base and diversity, and focus on operational excellence and sustainable investment to deliver substantial economic benefits for our shareholders and the economy for many years to come.

Our shared challenge is to ensure that when the cycle moves to the next production phase we’ve invested wisely for the future, and that communities have benefitted from our business success.