On two occasions, Fortescue’s Andrew Forrest has seemingly downgraded his big goal to be clean and green. Could more economic forces be at play here?

The facts of this story telling how Andrew Twiggy Forrest exiting his goal to make green energy machinery and equipment are clear. And hundreds of employees in his UK plant (that has 1,100 workers) are set to be jettisoned out of the Oxfordshire factory.

This is a backflip on Forrest’s big ‘going green’ plans and makes the inquiring mind wonder what happened. Is it because green goals are pie-in-the-sky, economically? After investing a US$1 billion in his UK factory called Fortescue Zero, has the ideal behind this investment been trumped by the real world? Or has China bounced Dr Forrest?

Lately, China has been pressuring BHP on the price of its iron ore, so is it time for Fortescue to cop some Chinese burns? Or is China simply more efficient and cheaper, so is Forrest’s decision purely economic?

To solve this mystery, let’s look at the facts of the case, thanks to the good work of Brad Thompson at The Australian. Consider the following:

1. Fortescue Zero planned to manufacture in the UK 400 green energy powered trucks for its iron ore mines.
2. This was a joint-venture with German truck-maker Liebherr.
3. Now the story is that battery plants and power systems needed for any trucks built with Liebherr would be made in, wait for it, China, not the UK.
4. This is not a total walk away from Fortescue going green because the UK business will be shifting emphasis from in-house manufacturing to research and development.

So, what’s the story behind this rejection of UK manufacturing in favour of China? Fortescue and Forrest have a close relationship with China for crucial demand for its iron ore.

Well, it could be China muscling Dr Forrest. That wouldn’t surprise anyone. Or it could be about the low costs of production, and the technology edge the world’s second biggest economy has over the likes of the UK and most other Western economies.

The following quote from Fortescue Zero’s new CEO, former Argentina rugby captain Gus Pichot, gives us a clue of the real world: “As we anticipated, technologies have advanced rapidly, market capability has grown, and others are now ready to match our ambition.

“To stay at the forefront of this acceleration and maintain our competitive edge, Fortescue

is shifting emphasis from in-house manufacturing to research and development, ensuring innovation moves faster and remains unconstrained.”

Pichot is being a realist. Obviously, Twiggy oversees a public company with shareholders who want profit and a high stock price, so if China can do green-oriented production better than the UK, then it’s simply economics that will see China win a lot of business to clean up the planet.

Ironically, China, the USA and India are named by the United Nations “as the greatest threats to the climate…”.

By the way, this is the second Forrest backflip on going green. His company cut 700 jobs globally in July last year that media reports saw as the founder and chairman downgrading his green-playing ambitions.

The combined impact of the high cost of wanting to be a green manufacturer and energy consumer, along with the technological advantage China has, especially as Artificial Intelligence helps efficiency, means China will be both the one of the biggest threats and the biggest saviour of the planet!

Now that’s an irony that no one with a grasp on history should be surprised about.

It will be interesting to see how the stock market responds to Fortescue’s share price today.