Fortescue CEO to step down as miner expands green energy push

Fortescue CEO Elizabeth Gaines. Credit: Fortescue Metals Group

Fortescue Metals Group said on Friday Elizabeth Gaines will step down as chief executive as the miner extends its transition from a pure play iron ore producer to a green energy and resources firm.

Gaines, who oversaw a tripling in the share price of the world’s fourth-biggest iron ore miner in the past four years, will remain on Fortescue’s board as a non-executive director and assist in the search for the new CEO.

The move comes as Fortescue’s chairman and Australia’s richest man, Andrew Forrest, pushes to turn the company into the world’s biggest green energy group, with a focus on hydrogen at its green power arm, Fortescue Future Industries (FFI).

Forrest hailed Gaines, a former travel industry and private equity executive who joined the company in 2013 and also served as its chief financial officer, as one of Australia’s “truly inspiring leaders”.

Gaines said she wanted to make way for a new boss to lead Fortescue’s evolution into a renewable energy and resources company.

“I don’t see this as departure of any shape or form, and I think this is just the opportune time. Fortescue is genuinely transitioning,” Gaines told reporters in Sydney.

The company did not set a timeline for the change over.

Fortescue has begun a worldwide search to identify its next chief executive and other leaders with “global experience across heavy industry, manufacturing, and renewable energy,” it said in a statement.

Analysts said the move was not unexpected, although the timing was a bit sooner than some had anticipated.

“Management churn at Fortescue has been an ongoing concern in the market, including risk to CEO tenure in the wake of Elizabeth Gaines selling the majority of her Fortescue shares in September,” Credit Suisse analyst Saul Kavonic said.

Its shares slipped as much as 1.8% and closed down 0.8%, underperforming its bigger iron ore rivals and the broader market, as investors mulled how the transition would fit into the company’s strategy.

“Fortescue needs to tread warily to make sure its iron ore business operates to its optimal potential as the cash flow generated will be initially the sole funding for FFI,” said Shaw & Partners analyst Peter O’Connor.

Fortescue lost its chief operating officer Greg Lilleyman, a highly respected executive in the iron ore industry, and two other senior leaders following a review this year of cost blowouts at its Iron Bridge magnetite project.

Kavonic had flagged the risk of Gaines potentially quitting in a September note after she sold around 65% of her shares, excluding performance rights.

Analysts also pointed to some disenchantment at Fortescue after long-term incentives were cut.

(By Shashwat Awasthi and Sonali Paul; Editing by Rashmi Aich, Sam Holmes and Richard Pullin)

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