The fortunes of two of Australia’s wealthiest individuals, Gina Rinehart and Andrew Forrest, both made from mining iron ore, are beginning to diverge due to their differing investments in energy sources. While Forrest, the man behind Fortescue Metals Group, has been heavily investing in green hydrogen as a possible future fuel source, Rinehart, who owns Hancock Prospecting, has been focusing on methane, or natural gas. The recent setback faced by Forrest in his hydrogen investments has highlighted the gap between the two billionaires and their approaches to energy.
Forrest’s focus on green hydrogen, produced using renewable energy to power an electrolysis process, has not yet proven to be commercially viable despite his reported investment of over $1 billion in the technology. Last week, operational difficulties led to a change of plans and corporate reshuffle at Fortescue, resulting in 700 job losses. The company is now shifting its clean energy targets to include more wind and solar power and less hydrogen. This change is significant for Forrest and Fortescue, his iron ore business that forms the backbone of his wealth.
Rinehart, on the other hand, has seen success in her plans to become a major producer of methane to address an Australia-wide shortfall. In late June, the Australian government gave her Senex Energy the green light to proceed with the $1 billion Atlas methane project, a joint venture with Korea’s Posco. This approval came after nearly two years of assessment and reports of a power shortage in Australia’s major cities and industrial centers. Rinehart’s win in the methane sector contrasts sharply with Forrest’s challenges in the hydrogen market.
The proximity of Rinehart’s methane success with Forrest’s hydrogen setback has implications for their respective wealth and business strategies. Rinehart’s choice of methane as an energy source that is readily available and profitable positions her to widen the wealth gap she enjoys over Forrest. Analysts are concerned about Forrest’s persistence in environmentally-focused investments and the lack of synergy between iron ore and green hydrogen. While most investment banks have labeled Fortescue as a stock to sell, Macquarie Bank has noted the company’s realigned focus but maintains an underperform recommendation.
Forrest remains determined to position Fortescue as a leading green technology, energy, and metals company, but the skepticism remains about the company’s split priorities and the potential impact of falling iron ore prices. While Fortescue’s future may be uncertain, Rinehart’s success with methane production underscores a different approach to energy investments that has proven fruitful. The diverging paths of these two wealthy individuals highlight the complexities and challenges of navigating the evolving energy landscape.
