Andrew Forrest denies his departure as Fortescue Metals Group’s chief executive is a move to head off a ban by the corporate regulator.
Mining magnate Andrew Forrest wants to focus on philanthropic activities.Credit: Wolter Peeters
Australia’s third richest man says he will retire as chief executive and become chairman, stepping back from the day-to-day running of the iron ore miner.
The company's shares shot up to an almost three-month high after the announcement, gaining 17 cents, or 2.6 per cent, to close at $6.69 on a day the broader market was flat.
Mr Forrest said he’d never felt more confident about the prospects of the company that had grown from an explorer to Australia’s third force in iron ore production, behind BHP Billiton and Rio Tinto.
Chief operating officer Nev Power will replace Mr Forrest as CEO, while current chairman Herb Elliot will step aside to become deputy non-executive chairman and lead independent director.
In February, the Federal Court ruled against Fortescue and Mr Forrest over misleading claims on deals with Chinese firms. He faces a ban from acting as a company director and heavy fines, but is appealing.
‘‘We manage the company for what is, not what might be,’’ he told reporters today. ‘‘I’ve made no secret that I’ve been spending up to 50 per cent of my time on philanthropic endeavours.
‘‘I think the responsibility for a chief executive ... when you’re spending that much time, you need to step down as chief executive, appoint someone who can really do that job better than you ... that’s exactly what I’m doing.’’
ASIC action not the only factor
Pengana Capital portfolio manager Tim Schroeders said he believed the Australian Securities and Investments Commission’s court action against Mr Forrest was relevant to the departure, but wasn’t the only factor.
‘‘It’s looming in the future and makes sense, but Andrew has been positioning the company regardless for him to have a less hands-on influence,’’ he said. ‘‘The nature of the business is it has transformed from an exploration developer to a producer. With that those risks change and the required expertise changes as well.’’
When you’re spending that much time, you need to step down as chief executive, appoint someone who can really do that job better than you.
Mr Power is a former head of engineering company Thiess in Australia and has held senior executive positions within Smorgon Steel and in the mining industry.
He said Mr Forrest would continue to be an important part of Fortescue as chairman, but a team of people were driving the company forward.
‘‘We are in the process of expanding this organisation into one of the great companies of the world,’’ he told reporters. ‘‘I will be looking to lean on Andrew for those things he does extremely well, freeing Andrew up to do those things he’s been looking to do and also to maintain very strong contact with the company.’’
He said that would include negotiations with the Yindjibarndi indigenous group, which reached a stalemate in April about the mining giant’s plans to build a new iron ore mine in the Pilbara.
Mr Forrest intends to focus on philanthropic activities, particularly in the area of indigenous disadvantage.
Tripling iron ore output
The company also announced today it had brought forward plans to triple its iron ore production target by up to 12 months, now hoping to reach 155 million tonnes per annum (mtpa) by 2013.
‘‘We’ve already silenced the critics,’’ Mr Power said. ‘‘We’ve done anything we said we were going to do.
‘‘We’ve done it faster, more efficiently than anyone else has done it.
‘‘We’re waiting for the market to understand that in its fullness and respond completely.’’
AAP