Andrew Forrest has spent the past three months living out of a suitcase, travelling from African outposts to Berlin, Paris and St Petersburg on his great green energy quest. The country’s richest man is back in Australia. He’s looking to turn his attention to large-scale solar and wind energy projects at home after staking a big claim on hydropower in Africa and talking with Russia about similar projects.
Andrew Forrest rides a Buzkashi horse around the grounds of the presidential palace in Kabul soon after a terrorist attack that almost killed the Afghan vice-president. All up, Forrest has spent eight months of this financial year on the road while his Fortescue Metals Group has blasted away at iron ore mines in Western Australia’s Pilbara and shipped the steel-making ingredient to China at record prices.
“We’ve been existing on three or four hours of sleep. It has been a really tough trip,” he told AFR Weekend. Forrest and wife Nicola were in Goma in the Democratic Republic of the Congo last weekend, with the city still recovering from the shock of a deadly volcanic eruption. He stood on the shores of Lake Kivu – where scientists were warning magna flows could unleash a lethal cloud of gas – with DRC president Felix Tshisekedi and signed up Fortescue for its greatest challenge. The deal includes some wiggle room for both parties but gives Fortescue subsidiary Fortescue Future Industries the inside running on developing Grand Inga, the world’s biggest hydropower project which involves damming part of the mighty Congo River.
There’s a massive question mark over whether it can be done after decades of hype and false starts. One of those involved in the false starts was BHP, which looked at a smaller incarnation of the project known as Inga 3. A big problem holding back Inga projects over the years is that the power generation involved is too much for African markets to handle. The BHP proposal for Inga 3 included an anchor user in the form of a 2000-megawatt aluminium smelter near the hydropower plant.
The mining giant pulled out of any deal with the DRC in 2012 and the World Bank followed in 2016. Forrest famously made his iron ore billions by picking up mining tenements in the Pilbara that had been dropped or unwanted by the likes of BHP and Rio Tinto. Advertisement Fortescue then had the example of its bigger rivals to follow when it came to developing mines and export infrastructure. But there are no maps for where Forrest is taking the company now. Apart from the challenges in the Congo,
Fortescue has had teams in Russia looking at hydropower projects in that country’s far east. Show of solidarity Forrest is looking to blaze a global trail in large-scale green energy, green hydrogen and green ammonia production, and trying to find customers in a nascent market while relying on technology to catch up. To achieve his vision of making Fortescue a global energy player to rival the oil and gas super majors, he only needs the world to get on board. Since leaving Perth in April, he’s visited Japan, South Korea, Indonesia, the United States, Denmark, Germany, Netherlands, France, Jordan, Russia, Kenya, Djibouti, DRC, Cameroon and Namibia. The previous five-month trip took Forrest and his Fortescue team to 47 countries.
He narrowly avoided being caught up in a deadly terrorist attack in Kabul and had to postpone a planned trip to Kyrgyzstan after catching COVID-19 from a Russian translator and being airlifted to a Swiss clinic. But Forrest may have dodged a bullet by catching the virus because the presidential palace where he would have been staying in Kyrgyzstan was attacked and set on fire by protesters following disputed election results. Why go to high-risk places such as Goma, Kabul and Kyrgyzstan in the middle of a global pandemic when you’re a family man with a near $30 billion fortune and a capable team of executives behind you?
“You go to places where the president knows that you don’t have to be there and you are going there to show solidarity with the country,” Forrest says. “It is depth of relationship with the administration of countries based on mutual trust. Advertisement “In every country where Fortescue has secured development rights, it has an agreement with the sovereign leader that should it encounter corruption in any form it will inform the leadership of that country, including the president, who will announce that. “And therefore everyone knows from the outset that the entire bidding and construction process will be totally transparent and void of corruption.”
Deals in DRC, Kenya, Ethiopia Forrest was on his second visit to the DRC when he signed the Grand Inga deal. He hasn’t gone back to some of the developing nations he visited on the first stage of his green energy quest because they wouldn’t agree to conditions on improving human rights, eliminating modern slavery and ending forced marriage. Achieving those admirable goals on top of massive investment deals won’t be easy in Africa, a continent with a reputation for political instability and governance issues. The complex of the Inga Dams.
The DRC is one of the most challenging African nations to do business with. As mining veteran and Firefinch chairman Alistair Cowden quipped this week after striking a $250 million deal for China’s Ganfeng to buy a half share in a lithium project in Mali: “The government is supportive, even if it keeps changing.” The DRC is one of the most challenging of African nations to do business with. The last election in 2018 was the first peaceful transfer of power in the country’s history, though even that faced credible claims of being a stitch-up.
Forrest says he has done deals for Fortescue on green energy and green hydrogen projects in the DRC, Kenya and Ethiopia, with investors and financiers already indicating a willingness to commit more than $US100 billion ($132 billion). Grand Inga alone carries a $US80 billion price tag and the development plan Fortescue will lead includes associated port, green hydrogen and green ammonia capability.
A lot of the investment dollars would come from Europe, where Forrest says there are customers eager to get their hands on green hydrogen. Advertisement Former investment banker and major infrastructure project overseer Philippe Benoit has intimate knowledge of Grand Inga, a project hailed as being able to produce 42,000 megawatts of electricity based on expansion of the existing 351-megawatt Inga 1 and 1424-megawatt Inga 2 plants. ‘Environmental and social risks’ Benoit was the World Bank man in the DRC for four years and facilitated the last major investment in an Inga project.
He says the addition of transportable green hydrogen capability would overcome what has been one of the great stumbling blocks to developing Grand Inga – massive power generation way beyond regional demand. In the past, it was envisaged that a large transmission network stretching across multiple borders would be needed to justify the investment. However, there was little appetite for such a plan given credit question marks over the potential markets. If technology allows green hydrogen to be produced and transported at scale, getting it out of Africa to the world shouldn’t be a huge stretch.
Benoit points out that Inga is close to the coast and that the region is not unfamiliar with big industrial centres used to export fuel. RELATED Andrew Forrest is defying sceptics to wrangle a green energy future Just up the coast in the Republic of the Congo, French oil and gas major Total – which aims to get to net zero emissions by 2050 – has a major processing and export hub. Benoit says that, while the addition of green hydrogen reduces the market risk that has always surrounded Grand Inga, it still comes with huge environmental and social risk. The Great Inga plans involve building a much bigger dam than with Inga 1 and 2, and flooding a valley.
It’s estimated 25,000 people could be displaced. Projects like these have a troubled past. China displaced millions of people to build the Three Gorges dam and hydropower project for less than half the megawatts promised by Grand Inga. “The environmental and social impact are problematic and this is where weakness in DRC governance systems tends to exacerbate the problems,” Benoit says.
Advertisement “Do you have comfort in solid safeguards to make sure whatever number of people need to be displaced or are otherwise adversely affected are compensated?” Benoit welcomed the Forrest pledge that any foreign entity or company that worked with Fortescue in Africa would have to commit to training local workers so that they build the infrastructure and power projects. Forrest at the St Petersburg Economic Forum in Russia. However, Benoit thinks that is just the start and more will need to be done to ensure economic benefits flow across a broad base of the DRC population and many more homes get access to electricity.
“This is the jewel of the DRC and much of Africa,” he says. “There are extremely poor people and how you treat those people will be very relevant to people’s willingness on the investor side to back the project.” There’s no doubt Forrest will have been talking to potential investors and financiers about the environmental and social issues as well as the imperative to step up the fight against climate change. “Fortescue has secured the prime hydro sites across Africa to develop in excess of 100 gigawatts of power for green hydrogen product,” he says.
“We have firm interest for at least that amount in Europe and we are continuing to build relationships across Africa, Latin America, Europe and Asia. “We are speaking to off-takers, governments and energy source nations as we stitch together a global green hydrogen supply chain.” On the first trip, the Fortescue travelling party split into multiple teams to carry out the work, setting up bases in Croatia and the Turks and Caicos Islands, north-east of Cuba, to regroup. On the latest tour, they stayed on the road “going in and out of various stages of exhaustion”. Forrest’s private jet travel included a whirlwind of meetings with business leaders and heads of state. He gave high-profile media interviews promoting green hydrogen as a silver-bullet solution to climate change and railed against fossil fuels and promoters of blue and grey hydrogen as part of the energy transition.