China moving on from Pilbara iron ore unfit for green steel: Forrest

Forrest is the largest shareholder in Fortescue, the country’s third-largest iron ore miner after BHP and Rio Tinto. All three companies are grappling with falling ore grades in the Pilbara as mines age, and Forrest said Chinese buyers were shifting their attention to African and Brazilian deposits.

“They are going to shut down the old-fashioned, two-century-old technology of burning sticks and logs, putting in coal, putting in iron ore, burning it all and sending up masses of pollution into the atmosphere and producing steel,” he told the Financial Review Mining Summit in Perth.

“They’re looking straight into a future that may or may not include Western Australia. China will base its green steel industry on other ores that are specific to Brazil or Africa, but not specific to our lower grades.”

Western Australia is the largest exporter of iron ore, while China is the biggest importer, taking 72 per cent of the world’s supply, according to figures published by Industry Department earlier this year.

While iron ore exports rose 1.2 per cent in 2024, the department’s economists forecast output will peak within three years.

“Rio Tinto, BHP, they talk a big game, but everyone is going down,” Forrest said. “The choice is getting made now, and we don’t have any time to lose to have an iron ore industry which is going to deliver what the customer wants, which is green metal … or they will get it somewhere else.”

The iron ore industry is soon to be hit by a wave of new production from Simandou in the West African country of Guinea – operations that will mine higher grades of ore that can be used in the cleaner production of steel.

“Issues like pollution are still very politically sensitive over there and politically important. As soon as they have a choice, they are bringing in renewables at a speed the world has never seen,” said Forrest.

“They are quickly moving away from coal [for energy production]. It’s frightening. And they’re producing more renewable energy and building more renewable energy than the rest of the world combined.

“It has a huge impact on us. There’s not a snowflake’s chance in hell that they are not going to turn their cities green with blue skies.”

While Fortescue has retreated from some green energy projects – most recently sacking 90 staff at hydrogen developments in Queensland and WA – Forrest said he had not given up.

“I know the news cycles are pretty short, so it’s so easy to believe the hype – you don’t walk away from hydrogen,” he told the summit. “That is just complete rubbish. Every time that article has been printed, Fortescue continues to double down on hydrogen.”