Fortescue behemoth enters the game, page-10

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New Fortescue bosssays critical minerals M&A an option at right price

New Fortescue Metals Group bossFiona Hick says acquisitions in the critical minerals sector are an option forthe company, signalling a potential shift in strategy for the iron ore giantthat has historically relied on its own exploration and project development.

Ms Hick indicated she is open to a new approach after beingtasked by the Andrew Forrest-led board with diversifying into green metals suchas lithium, following years of talk and drilling thatfailed to deliver any remarkable finds.

Fortescue founder and chairman Dr Forrest has said that ideally,the mining division will supply lithium and other battery minerals to thecompany’s clean energy focused Fortescue Future Industries.

Fortescue has never made a big bucks acquisition in mining, andhas no assets in production outside the iron ore mines it built in the Pilbararegion of Western Australia. It explored for lithium in WA and South Americaover the past seven years, and resisted any temptation to snap up the likes ofPilbara Minerals when lithium prices tanked in 2019.

“That’s always part of our thinking because there are differentways to grow,” Ms Hick exclusively told The Australian Financial Review in her first major interview since becoming metals division chief executive.

One is through the drill bit and oneis through acquisition, but it’s got to be at the right price.

“We’re being pretty disciplined in not just looking at or makingacquisitions for the sake of it. We really need to make sure that they stack upfinancially.”

As well as evaluating battery minerals acquisitions, Ms Hickrevealed Fortescue is growing more confident about its move into iron ore miningin the African nation of **on.

Ms Hick, who previously worked at Woodside Energy, advocated a no-nonsenseapproach with a heavy emphasis on keeping operating costs down as producers battle pressure on margins.

“At the end of the day, we’re here to be a successful business.Keeping a strong focus on things we can control is where I’ll be placing myfocus because we want to ensure the continued success of the business inwhatever future scenarios we might face,” she said.

Fortescue has exploration tenements in South America and a teamlooking at critical minerals opportunities in Brazil, Chile and Argentina, butis preparing to rationalise.

“We’re doing some work at the moment to really sharpen thepencil on what’s essential under that critical minerals strategy, and whatmight be non or less core to the business,” Hick said.

In **on, where Fortescue aims to make its first iron oreshipment before December 31, Ms Hick said the project was progressing well:“Every indication we have through geological mapping and the samples that we’vetaken indicate that it’s really high-grade and large scale,” she said.

“The drilling program will occur over time to prove that out,but initial indications are that it could be similar in scale and size toSimandou in Guinea.”

Rio Tinto and its partners in Simandou have flagged shipping 60million to 80 million tonnes a year of high grade iron ore from Guinea and evenbigger volumes later in the life of the project.

Ms Hick took the reins of the metals division on February 27after a tumultuous period marked by high-profile departures, the company beingcharged with failing to supply work safety authorities with documents relatingto cases of alleged sexual harassment, and other controversies.

However, it did not stop Fortescue shipping a company record143.1 million tonnes of iron ore for the nine months ended March 31, up from139.5 million tonnes in the year-earlier period.

Fortescue’s biggest-ever acquisition came last year, when itpaid $US223 million ($336.1 million) for battery manufacturer Williams AdvancedEngineering. The ownership and control of that asset since transferred to the Mark Hutchinson-led FFI.

On top of leading Fortescue into battery minerals and **on, MsHick is expected to deliver on the company’s plans to spend $US6.2 billion aspart of a switch to renewable energy to decarbonise the iron ore operations by2030.

“It is a massive challenge, but decarbonisation is also amassive opportunity,” she said.