Forrest steps down as CEO of Australia's Fortescue

Wed Jun 1, 2011 8:51am GMT

* Chief Operating Officer Nev Power named CEO
* Forrest to become chairman
* Fortescue to reach 155 mln tonnes a year output in 2013
* Shakeup comes as Forrest appeals case on misleading investors
* Shares up 2.6%, hit seven-week high (Adds 2017 production target, updates shares)

By Narayanan Somasundaram and Sonali Paul

SYDNEY, June 1 (Reuters) - Andrew Forrest, the brash chief executive who turned Australia's Fortescue Metals from a penny stock into a $22 billion iron ore miner, will step down next month, just as it speeds up plans to triple production.

Chief Operating Officer Nev Power was named as new CEO in an appointment investors said would remove a degree of uncertainty about who will run Australia's third-largest iron ore miner after the departure of its founder.

Forrest will take up the role of non-executive chairman from July 18 to focus on his philanthropic work in Aboriginal communities, the company said on Wednesday.

"They've been talking about this succession planning for a little while. It'll be neutral to mildly positive in the market," said Ric Ronge, a portfolio manager at Pengana Capital.

Forrest's move to retire as CEO comes a few months after he and Fortescue lost an appeal-court hearing into allegations that they misled investors, a decision that could lead to Forrest being banned from being a director.

Fortescue has appealed the decision and Forrest was as defiant as ever on Wednesday, saying he was confident he would succeed in winning the case.

"We absolutely do not expect it to go against us," he told reporters.

Power, 53, joined Fortescue from Leighton's Thiess mining services and construction arm, where he was chief executive of Australian operations. He only took up the chief operating officer role in February 2011 but was considered by analysts as a good hire.

Following a worldwide trip to meet equipment suppliers, Power said the company was confident it would be able to meet its expansion target of 155 million tonnes a year by June 2013, one year earlier than planned.

That would put the company's new output ahead of expanded production due online from giants Rio Tinto and BHP Billiton between late 2013 and 2015.

"So I think that we've already silenced the critics. We have done everything that we said we were going to do and we've done it faster and more efficiently than anybody else has done it," Power told reporters.

Fortescue's shares jumped to a seven-week high after he said the ramp-up would be fast-tracked and closed up 2.6 percent, outperforming a flat broader market .

The company has ambitions to produce 355 million tonnes a year by 2017, which would catapult it ahead of Rio Tinto and BHP. The expansion involves three projects under study, with exports through two ports in Western Australia.

DONATING SHARES

Forrest, also know by his nickname "Twiggy", founded the firm in 2003 after a decade of promoting everything from Cuban-style nickel mining to underground desert oceans.

He is credited with turning Fortescue into the country's third-largest iron-ore producer after Rio Tinto and BHP Billiton, with a market capitalisation of $22 billion as his bet on the metal paid off amid record rise in prices.

Power saw Forrest's big stake in the company as a source of stability on the share register.

"I see that stakeholding by Andrew as relieving us from a lot of the distractions that would otherwise be around," he said.

Forrest, who owns 31.25 percent of the firm, said he would continue to give away some of his shares. Forbes lists his net worth at $6.9 billion, ranking him as one of the country's top billionaires.

The 49-year-old has already donated millions of dollars to fight poverty and alcoholism among Aborigines, many of whom he employs digging mines and laying railroad tracks hundreds of miles across the Western Australian outback.

Forrest will replace Herb Elliott, the 1960 Olympic 1500-metre run champion, as the company's chairman.

Fortescue, 16 percent owned by China's Hunan Valin Iron and Steel, is scheduled to deliver an investor presentation later on Wednesday and is hosting analysts and investors on a site tour on Thursday. (Editing by Muralikumar Anantharaman and Vinu Pilakkott, sourced Thomson Reuters)