Andrew Forrest once told his wife that he wanted to make a lot of money and then give it all away. 

Giving it away was, as always, pretty easy in 2017-18.

But making it in the first place got a little harder, courtesy of the changing economics of the world steel industry and Mr Forrest slipped one spot to No.3 on this year’s WA’s Rich List.

His fortune tumbled almost $1.2 billion, down from $5.65 billion in 2017 to $4.48 billion this year.

 

As most West Australians know, the main source of Mr Forrest’s wealth is Fortescue Metals Group.

Fortescue makes its money selling iron ore to Chinese steel mills. And those steel mills aren’t paying what they used to.

At 58 per cent iron, Fortescue’s ore has always fetched less than the 62 per cent benchmark price. Over the past few months that gap has widened as Chinese mills favoured product that caused less pollution during production.

New Fortescue boss Elizabeth Gaines reckons the discount for her wares is temporary but investors are unconvinced — FMG’s stock has shed more than $1 a share over the past couple of months.

Diversification is now a key part of the miner’s strategy. Fortescue has expanded its exploration to lithium in the Pilbara and copper and gold in South Australia, NSW and Ecuador. It recently pegged exploration tenements east of Kalgoorlie.

Image: Andrew & NIcola Forrest. The West Australian.