Article by Joe Aston for the Australian Financial Review

Fortescue chief Andrew Forrest tells Joe Aston that the best way of compensating traditional owners is with work. The traditional owners don’t agree.

Fortescue Metals Group executive chairman Andrew Forrest caused a stir at the company’s interim earnings call on February 15 for lamenting “this era of cash for nothing” and “Alice Springs alcohol disasters” in response to specific questions about FMG’s long-running legal dispute with the Yindjibarndi traditional owners, whose lands Fortescue has now been mining for a decade without consent or compensation.

The comments were leapt upon by the ABC, The West Australian and by this newspaper’s Rear Window column and in response, National Native Title Council chairman Kado Muir declared that “You can’t go around talking about fighting modern slavery or promoting green technologies if you’re still addressing Aboriginal people with these types of responses. All credit to the programs he’s run, but you can’t shy away from your legal responsibility.”

Dr Forrest insists that his comments were misconstrued and that he was talking about the recently abolished cashless debit card for Indigenous welfare payments, which he wasn’t asked about. He argued this in an opinion piece published in The Australian Financial Review on Thursday.

“Joe, you mustn’t misquote me,” Dr Forrest said in an interview with the Financial Review to clarify his position. “I’ve said many, many times, and if you don’t put this in your article, I’ll be really disappointed: I’m happy and always have been happy to meet with [Yindjibarndi Aboriginal Corporation CEO] Michael Woodley any time, we’ve known each other for a long time, [former Fortescue CEO] Elizabeth Gaines has met with him several times, [Gaines’ predecessor] Nev [Power] did as well, OK? We pay so much money in cash royalties it makes your eyes water, and we’re happy to do it. But we also pay in training and guaranteed employment and changing lives, and that is because we have a right to not just pay cash.”

“There is a media construct that we don’t want to settle. It’s not true. [Woodley has] had a whole heap of others who have counselled him, who are really serious elders in our community, say, ‘Just go meet with [Forrest], he wants to settle this, he’ll be fair and equitable to all of us. And by the way, he paid us heaps of cash, as well as everything else’. Because the everything else really means a lot to him, and it’s fine by us.”

The Yindjibarndis’ compensation claim will be heard by the Federal Court in July. Mr Woodley told The West on Friday the YAC was holding firm on its demand for native title compensation from FMG of 10 per cent of the value of minerals shipped, or more than $500 million per year and more than $3 billion in back pay. This would be the most generous land use agreement in the history of the Australian resources sector by a factor of 20, potentially recasting the operating economics of the entire industry.

The Pilbara standard native title compensation rate paid by Rio Tinto and BHP is 0.5 per cent of the value of minerals shipped.

Asked about a YAC claim for compensation comparable to the WA royalty rate, which is 7.5 per cent, Dr Forrest said, “I don’t think that would be fair and equitable to anyone else”, specifically the seven other traditional owner groups FMG has native title agreements with across the Pilbara.

“There’s a kind of social structure across Indigenous communities, which any anthropologist can tell you about,” he said. “Let’s just say it exists on the concept of fairness and equality across communities. I am relied upon by the other seven major communities to be fair and equitable across them and I take that responsibility super seriously.”

Fortescue opened Firetail, the first mine in its Solomon Hub, on Yindjibarndi land in 2013. Unable to reach agreement with the YAC, in 2010, FMG funded a breakaway Aboriginal corporation that sued to replace the YAC as the registered native title holder. The Federal Court rejected that bid in 2012 and granted the YAC exclusive possession over the land in 2017. The Full Court of the Federal Court upheld that decision in 2019 and in 2020 the High Court denied FMG leave to appeal.

The other half of FMG’s Solomon Hub sits on Eastern Guruma land. Under their native title agreement updated in 2019, FMG pays a cents per tonne rate up to a capped amount of $6.5 million per annum. In each of 2021 and 2022, the cap was reached as FMG shipped 40 million tonnes of ore with an approximate value of $5 billion each year from Eastern Guruma.

Based on the 2022 average ore price of $US103, an average AUD/USD exchange rate of 0.70 and applying the discount for FMG’s lower grade product, FMG’s compensation rate is equivalent to one-quarter the rate paid by Rio Tinto, which operates six mines on Eastern Guruma land.

Fortescue’s native title agreement with the Eastern Guruma people is broadly in line with its other six agreements with traditional owner groups.

Dr Forrest pointed to the $4.3 billion in education, training and contracts Fortescue has spent since 2011, which he presents as supplementary to native title compensation payments.

“The package comes as cash, OK, because the Native Title Act wants you to negotiate, wants you to settle. Then you bring into account all your experiences and with mine it’s not just solving my problem, which is easily done with cash, it is wanting to stay part of this community for many generations, like my family has been for many generations.

“So, what I try and do here is give people a pathway as well, and the pathway is guaranteed employment connected to training. And no one does that, it was brand fricking new when I started VTEC at Anaconda Nickel. We now employ so many Indigenous people which have come out of that. We’ve lost Indigenous people too because they’ve gone on to create businesses and those businesses have come back and charged us and others successfully billions of dollars. The disparity is ending in their lives. So, I just have a more complex attitude wrought from my childhood.”

Dr Forrest rejected the suggestion that contract work awarded to Indigenous firms was not a straight benefit or compensation to Indigenous communities in exchange for land use but actually an economic exchange whereby Fortescue receives the benefit of services rendered.

“That is so academic, OK, so out of touch. When you issue a very large contract for mining, you’ve actually got to take people on the full journey. You’ve got to train them all the way through, you’ve got to continue taking much more elevated levels of risk, which you offset wherever you can, in order to get these companies going. It’s very hard, it knocks productivity around, takes up stacks of time for everyone. But we all love it, it’s in the DNA of Fortescue.

“Can we get this straight? When they leave you and set up their own businesses, they are not employed by us, they are working for themselves, creating opportunities and payment with other companies. They are barriers ended in their lives, and that’s what I live for.”

He also said that Aboriginal companies were about 100 times more likely than non-Aboriginal companies to employ other Aboriginal people.

According to Rio Tinto’s annual report released on Thursday, the company spent $565 million through Indigenous businesses in 2022.

“Don’t ask me to be a duck when I’m a bird”

Standard practice in modern native title agreements struck by Rio Tinto and BHP is for compensation to be paid into professionally managed trusts with intergenerational charitable objectives. The resources companies retain oversight and stipulate how the money can be disbursed. Discretionary cash payments to individuals are strictly limited to avoid expenditure on booze, drugs or gambling.

​​Dr Forrest dismisses the model, saying that “the answer I get back is ‘we can walk and chew gum, thanks, we just want cash’. You’ve tripped over a very serious problem here, which is that cash gets locked up … or it’s controlled by one person. I just want you to think for a bit [what] that looks like.

“I’m not going to be mentored by [BHP or Rio]. I would not exist had I followed everything they do, we wouldn’t be here. So don’t expect me suddenly to change into a duck when I’m a bird, right? This is a different company, it’s achieved an utterly different result, and we don’t want to just pay cash and not have a relationship.

“All the whitefella things which you speak about so eloquently are the problem. Yes, it looks great to us … but how does it actually work in their community? Well, OK, in some cases, it gets wrapped up in the power of a single person. And you don’t go against that person. So let’s not dig into an entire another world.”

“The first person on your doorstep is a drug dealer”

On FMG’s earnings call last week, Dr Forrest was wrongly accused of “often [using] the term native title welfare”. He was also misquoted as saying at Fortescue’s 2019 annual meeting that native title compensation owed to the Yindjibarndi people was “mining welfare”. This phrase was actually uttered by a shareholder in a question from the floor.

Dr Forrest has previously likened native title compensation to “handouts”. He told the Financial Review in 2021 that “If you just exist on handouts, then for all the flowery talk in the world you’re weakening your people and, of course, you have that very situation in some Aboriginal communities where they’re covered in welfare, they’re covered in royalties”.

And at that 2019 AGM, Dr Forrest said about Roebourne, the main town on Yindjibarndi land, that “I happen to have grown up near that town. My mates from Roebourne are all dead. Alcoholism and the drugs and the wanton misbehaviour. The fact that kids don’t go to school. That’s not a community I’m going to empower with tens of millions of dollars of your cash.”

Dr Forrest reiterated those comments to the Financial Review this week, saying, “Hang on, my mates [in Roebourne] died from the lack of opportunity … If you don’t know what to do getting up in the morning, and the first person on your doorstep is a drug dealer or a publican, it makes it hard.”

Asked what he has done to fix Roebourne in the decade he has extracted more than $20 billion of ore from their land without consent or compensation, Dr Forrest said, “There’s eight major communities here, seven of whom have settled, OK? We’re talking about one, so let’s not do any more conflating.

“We have agreements with all the elders and Mr Woodley knows that if he would like to speak to me at any time, he can … Hopefully I bump into him again.”

Better yet, after Mr Woodley told The West on Friday he’d welcome an official invitation to meet with Dr Forrest, the Fortescue chairman extended such an invitation early on Friday evening.