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A million textual content messages and betting on inexperienced hydrogen: A Q&A with Fortescue Metals CEO Elizabeth Gaines


Elizabeth Gaines, the CEO of Fortescue Metals Group—and No. 5 on Fortune’s Businessperson of the Year list in 2020— has had a profession that’s about as diverse as they arrive.

The Australian government started her profession as a chartered accountant earlier than transferring on to work at an funding financial institution in London and different monetary establishments. On the age of 37, she turned the CEO of Heytesbury, then one among Australia’s largest personal firms with an eclectic portfolio of companies that included a West Finish theater firm in London, Australia’s largest dwell cattle operation, and a big building firm.

Her husband’s profession took her again to London, the place she turned the finance director for a UK-based media firm and did a lot enterprise in New York. She then returned to Australia to work in personal fairness, the place she gained extra worldwide expertise, specializing in belongings throughout the journey and hospitality industries. In 2013, she turned the primary lady to hitch the board of Fortescue, an Australian iron ore miner that has had a meteoric rise over the previous decade or so. In 2017, she joined the mining firm’s government group as CFO, and in 2018, she turned its CEO.

Her three years on the helm have been spectacular sufficient to land her on Fortune’s annual listing of high enterprise leaders twice. Most not too long ago, even amidst a world pandemic and fast-souring relations between Australia and China (Fortescue’s foremost export market), the 17-year previous iron ore producer posted record-breaking operational and monetary ends in its 2020 fiscal yr (which resulted in June).

Gaines, who additionally ranked No. 17 on this yr’s Fortune’s Most Highly effective Ladies Worldwide listing spoke with Fortune not too long ago about main her firm by means of the pandemic with humanity (and with out shuttering operations), why she’s betting on inexperienced hydrogen, and what’s altering (an pressing deal with local weather) and what isn’t (the underrepresentation of ladies leaders) on this planet of enterprise.

So, 2020?

It’s been an fascinating yr. I don’t suppose any of us would have anticipated this. We’ve continued to carry out—I put that right down to our tradition and various workforce and there’s a robust market, so a mixture of these issues.

When did the coronavirus first come in your radar?

We’ve got an workplace in Shanghai, so we first began coping with coronavirus final January, when a few of our group members who, as a result of it was Chinese language New 12 months, had traveled to varied elements of China. Because the virus unfold there, they had been in areas of lockdown, so our group members had been impacted. We’d been coping with that and supporting them and supporting our clients in China. We really donated one million {dollars} to assist the conversion of a sports activities stadium in Wuhan to a COVID Restoration Middle, so it got here on our radar early.

Then as we began to acknowledge it was going to hit Australia as properly, we progressively made a lot of selections.

Inform us about that.

We’re a mining operation. Most of our mines are in distant areas, we’ve lots of fly in-fly out workforce. They fly in for the two-week shift after which they’ve every week R&R. Managing individuals and the motion of individuals and the measures we’ve needed to put in place has been fairly extraordinary. We needed to lengthen rosters from somebody with as much as 4 weeks on, two weeks off.  4 weeks on is sort of a giant problem—you’re 4 weeks away from your loved ones.

We did that as a result of it diminished the motion of individuals by round 40%. After all, the way in which illness spreads is thru individuals transferring so we made that call in order that we might decelerate the motion of individuals. After which we put in place a variety of hygiene measures—we needed to change our mining village facility to shut a few of the eating and different providers and make it takeaway slightly than have individuals gathering. We needed to change the way in which we handled their flights [for] bodily distancing on flights. It was a complete.

I feel one of many issues concerning the mining sector is we at all times have these form of security plans in place, not simply in response to infectious illness administration.  As an business, we really banded collectively. There’s fairly a major useful resource business right here in Western Australia and we’ve business our bodies. We met usually with the state authorities, with the premier of Western Australia and his ministers to have ongoing dialogue about easy methods to maintain the mining sector working. Apparently sufficient, Australia’s financial scenario is much extra sturdy than I’d say most different international locations globally as a result of the mining sector has continued to function. The West Australian authorities right here has simply returned a funds surplus, they usually would be the solely state in Australia to return a surplus this yr. That’s solely as a result of position that they’re receiving from the mining sector. So we’ve actually saved Australia going.

Have you ever had any outbreaks at your operations?

We haven’t had one case. Clearly there was group unfold of circumstances in Australia, not a lot in Western Australia, extra in Victoria, which had a reasonably extreme lockdown for fairly a protracted time frame. There have been circumstances in Western Australia however we don’t have any on our mining websites, and I feel that’s due to the measures we put in place.

Communication was key to your technique in managing COVID-19. Are you able to speak about that?

Our administration group, we met twice each day, seven days every week, for a protracted time frame. And we nonetheless meet usually however not as usually. Issues had been altering fairly quickly and as we began to see new measures being launched and our authorities was introducing sure restrictions, we needed to maintain in keeping with these restrictions. We realized that simply counting on the standard form of e mail messages in all probability wasn’t going to fairly get there as a result of usually our employees will probably be off shift. They’re on R&R, they’re not really on website. We shortly realized that textual content messages had been top-of-the-line methods—a brief SMS to individuals to say, now we’re updating our flight schedules or we’re introducing a roster change. We’ve despatched over one million textual content messages since March. I feel one gentleman talked about that he’d had extra textual content messages from me in the previous couple of months than he’s had from his spouse in 20 years of marriage. You may’t over-communicate in these circumstances. You actually should maintain individuals knowledgeable.

On the coronary heart of the pandemic, once we needed to change a few of our flight schedules. I’d exit to the airport—our flights typically go at very unpopular hours, like 4 a.m. So that you exit to the airport early within the morning, and you’ll greet individuals, and have a dialog with them simply to ensure they understand that they’re an vital a part of the group. We wish to ensure that they really feel supported. The mix of the human interplay, SMS messages, after which video content material. We’ve got weekly city corridor conferences—video is offered for individuals to look at, so we do spend lots of effort and time speaking.

Given the pandemic started in China, your foremost export market, had been you anticipating record-breaking outcomes this yr?

We really ran by means of a lot of situations that you’d anticipate. The outstanding side of that is the restoration in China. Regardless of the pretty important lockdowns very early within the yr, China handled this pandemic in a really managed and methodical manner and really bought again to enterprise in a short time. So what we’ve seen is a major improve in crude metal manufacturing. And clearly, we’re a significant iron ore provider, and the energy of China’s restoration has been, I feel, really excellent. We’ve seen elevated demand for iron ore, and that has supported the present iron ore value, which has been at the next degree for a while now.

Crude metal manufacturing is one indicator of the energy of the [Chinese] economic system. And that’s up 4 and a half p.c for the 9 months to the tip of September, with China producing about 780.2 million tonnes of crude metal. They’re on monitor to exceed a billion tonnes of crude metal manufacturing this calendar yr.

We did see different iron ore producing nations had been impacted by COVID. South Africa had a whole lockdown together with mining. Brazil had some impacts from COVID, not as important, however I feel Australia and Western Australia demonstrated that we’re very dependable provider of key commodities for steelmaking through the pandemic.

So in the beginning, for us, was to proceed to function, which we’ve achieved, and there have been different measures we needed to put in place. We needed to look very intently at our transport provide, as a result of clearly the motion of ships out and in of ports has been underneath some scrutiny, and we put measures in place to deal with that. Towards that backdrop, and the very robust efficiency from the group, we had been capable of obtain these data. And we’ve seen on account of that robust demand for iron ore, that’s translated into document monetary efficiency, in addition to document operational efficiency.

Do you anticipate that robust demand from China to proceed?

We’ve got lots of confidence within the ongoing energy of the Chinese language economic system, and positively lots of that’s led by means of infrastructure investments. There’s nonetheless fairly a protracted pathway to achieve peak urbanization in China. That drive to urbanize the nation and rework the economic system and elevate individuals out of poverty is to an overarching need of the Chinese language authorities, and in order that tends to imply that there’s additional funding in infrastructure, whether or not that’s new airports or high-speed rail or highway infrastructure.

To what do you attribute your document operational efficiency?

We proceed to set ourselves stretch targets, and we’ve bought an actual tradition of delivering in opposition to these targets. We’ve built-in our operations, and our mine planning and advertising and marketing features so we’ve bought higher integration throughout our complete operational provide chain which I feel which has given us higher coordination throughout the entire enterprise.

We’ve elevated our capital funding over the previous couple of years in our processing services. So we’ve elevated sustaining capital, we’ve reinvested again into the enterprise, and we’ve really began to see the advantages of that funding.

You’ve talked about Fortescue’s tradition. What makes it distinct?

We delight ourselves on being low on forms, excessive on empowerment, and values like household, integrity, setting stretch targets, having braveness and dedication. We’ve got a lot of values that actually drive individuals to do issues otherwise, to hunt innovation at each alternative, to actually really feel empowered as if it’s their Fortescue.

It’s a bit onerous to explain till you really see it, however we actually haven’t any obstacles, no, forms.  I sit in an workplace the place all the pieces is open plan. We form of roll our sleeves up and get on with issues.

Fortescue alongside the way in which has had it skeptics or individuals who thought we wouldn’t obtain our first iron ore train, which we did in 2008 or didn’t suppose we’d get to 170.5 million tonnes of annual manufacturing. We’ve got carried out that, and we’ve repaid our debt—on the peak, we had $15 billion U.S. {dollars} of debt—and we’ve been very disciplined and repaid money owed. Our current quarterly outcomes had been a web money place of a billion {dollars}. We’ve been a real entrepreneurial start-up that has achieved fairly excellent outcomes.

I feel this yr, there’s no larger demonstration of the significance of that tradition than with COVID-19. I feel if we hadn’t had that tradition, we would have had a special final result.

What’s high of thoughts for you now?

Security is at all times our primary precedence. We aren’t out of a pandemic but, and I feel complacency will probably be our enemy on this. We’ve got to remain targeted. That’s not only a Fortescue problem, I feel that’s extra of a world problem. Australia is in a really completely different place than he U.S. Our case numbers are very, very low. And the federal government’s decided to maintain it that manner.

We’ve had a really robust begin to this monetary yr. We simply had our first quarter the place we had document cargo—44.3 million tonnes. We’ve got to proceed our deal with delivering on that operational excellence. We’ve bought two main tasks underway or three really, two iron ore tasks and one vitality challenge. One is about to be accomplished which is the Eliwana mine and rail challenge, that’s a brand new facility and a brand new mining space for us, so the primary iron ore practice is due in December. And we’ve bought one other huge funding in Iron Bridge, which is a $2.6 billion funding. That’s a major challenge for us that’s properly superior. We’re about to enter peak building section, which is at all times a time the place you bought to a really, very targeted and aware of security and getting issues proper.

Vitality and local weather change is a key focus for us… There was a report launched this week by Deloitte Entry Economics that stated that Australia will undergo the financial equal of a COVID-19 disaster yearly by 2050 if policymakers don’t take decisive motion now to fight local weather change.

We’ve set a objective to achieve web zero operational emissions by 2040. That’s decade forward of our opponents, so we’re very bold to proceed to cut back emissions. We’re backing that up with funding. Our vitality challenge is Pilbara Vitality Join, which is a $700 million funding in massive scale, renewable vitality and transmission infrastructure—poles and wires incorporating massive scale photo voltaic and battery storage. As soon as that’s all accomplished 25 to 30% of stationary vitality will probably be sourced from renewables.

That’s simply the beginning actually. We’ve got to include extra renewables, we’ve to discover a technique to transition our cellular fleet—these are the massive mining vehicles, our rail operations, the issues that transfer round. They at present function on diesel so we’ve to search out the following era of mining fleet that can transfer away from diesel and fossil fuels and naturally harnesses renewables.

Australia has the chance to take part within the subsequent key export market. Our view is that will probably be inexperienced hydrogen, and so we really see that there’s important alternative for vitality to be a part of our future enterprise—a part of our decarbonization, but in addition a brand new marketplace for us and a brand new export market which can help with diversifying our markets extra broadly.

Are you able to elaborate, how will Fortescue take part on this new market?

We’re an iron ore operator, however we’re additionally an exporter.  We personal our personal rail infrastructure, we personal a few of our personal ships, we personal our personal port infrastructure. So we really handle massive scale infrastructure, we develop markets, we develop clients. Hydrogen is in some respects one other commodity. You may produce hydrogen from renewables within the Pilbara the place we function—there may be loads of solar and wind and water, so there is no such thing as a scarcity of the weather that you might want to produce massive scale inexperienced hydrogen. After which it’s concerning the infrastructure and the transport, and transportation in addition to clearly growing clients and markets, which is precisely what we do. We see a possibility for us to take part by means of the complete worth chain. We’ve bought huge ambitions, and there’s fairly a bit of presidency assist in Australia, each on the federal and state degree for these initiatives. I feel there’s recognition that hydrogen has the potential to be the following huge export commodity for Australia in the identical manner that iron ore and LNG have been. We’ve bought a lot of partnerships already introduced, and we’re working intently with potential clients and companions as we develop this this market.

What do you suppose is the timeline for inexperienced hydrogen?

Clearly, there are international locations like Japan and Korea which are transitioning away from fossil fuels. Hydrogen has been recognized as a major vitality supply, so these markets will transition. I feel, by the tip of this decade, it’s a major alternative. That demand will proceed to develop throughout this decade. The main focus is on figuring out these markets. and these alternatives. We’re engaged on the expertise. The expertise exists nevertheless it’s getting expertise to that bulk scale, and funding is required to attain this. The funding on this form of expertise is comparatively important. The good thing about the work that we’re doing is it helps not solely the event of that export market, but in addition offers an alternate vitality supply for our personal operations in order that we will decarbonize extra quickly.

There should not many ladies within the mining sector. And what has that been like and the way does that have an effect on your management?

Should you look around the globe at a few of the good examples of nations in the way in which they’ve handled COVID—New Zealand, Germany—I feel what’s demonstrated is that this well-known view traditionally that males can take the onerous selections and be extra decisive, I feel what COVID has demonstrated with feminine management at a political degree is which you can be decisive and empathetic on the identical time. That’s been a very vital reminder seeing how these international locations have handled the disaster.

Range is totally key. There’s analysis that exhibits {that a} various management group results in higher monetary outcomes, worth creation for shareholders and higher innovation, so I’m a agency believer in the advantages of variety. Definitely, at an Australian degree, with the ASX 200, Australian Inventory Alternate’s high 200 firms, the illustration of feminine management has flatlined. So regardless of lots of speak about rising the gender steadiness, I’m personally dissatisfied that over my profession, which is 30 years or so now, there doesn’t appear to be a lot change. We appear to be having the identical dialog, which is disappointing as a result of the proof is there.

In Australia, we’ve seen examples not too long ago of some fairly poor company conduct and cultures which have led to varied inquiries and folks leaving firms over simply poor conduct.  With larger variety, you’ll get probably a extra balanced method in a few of these issues. I’m actually trying ahead to the day when being the one feminine CEO of a significant mining firm shouldn’t be the novelty. However I feel we’re a good manner away.

[At Fortescue], 44% of our board are ladies. We’ve been one of many leaders from a board perspective by way of variety. 26%, in our senior management roles are ladies, and throughout their complete operations, we’re at about 19%. We actually wish to see that proceed to extend. We work onerous to place settings in place that assist women and men. Range for me is broader than simply gender, it’s ethnicity, as properly. And we’ve bought such a various backgrounds of individuals throughout our group. And that actually to me is what makes us obtain what we achieved.

Past Fortescue, what do you see within the sector by way of variety efforts?

There’s numerous speak about it, and a few the opposite massive firms have actually have set themselves targets. The assets sector is all the pieces from the large-scale operators like ourselves by means of to a lot smaller junior firms. it’s extra of the bigger firms that we’re seeing actual motion, and I feel a few of the smaller firms, possibly, possibly much less so. Even currently, exterior stakeholders aren’t specializing in it as a lot. There’s not as a lot focus as I feel it should be on persevering with to encourage firms to push for larger variety.