Poor old Andrew “Twiggy” Forrest (net worth down from $540 million to $330 million in a week) copped an almighty spray in a very feisty editorial in The West Australian today. While the controversial founder of Fortescue Metals is toiling away trying to ride the Chinese boom and create a new force in iron-ore, all the media wants to do is knock and carp.

The West’s editor Paul Armstrong is a former business editor of the paper, so you can assume he might have even written the spray himself — which included gems such as the following:

Escalating disquiet about the detail of the deals struck between Fortescue Metals Group chief Andrew Forrest and a Chinese consortium is damaging the state’s reputation as a place to business.

The issue of Mr Forrest’s use of the phrase binding contract is one part of a troubling incident in WA mining history. Of great concern, too, is the fact that the ASX was unwilling to become involved. Since the inglorious 1980s, WA has had a reputation among some for a cavalier approach to doing business. This is no way to overcome the problem.

The rest of the media is also having a field day with The Australian’sBryan Frith weighing in today, also calling for the ASX to get involved.

Fortescue shares opened another 17c lower at $2.93 this morning but then recovered to be 10c higher at $3.20 after an hour of trading. The investors who relieved Olympic legend Herb Elliott and Twiggy of three million shares each at $4.50 are now collectively $8 million down on their $27 million investment.

One wonders if they could have an action to recover their losses if it can be established that Fortescue was exaggerating the level of commitment from its Chinese partners, as now seems to be the case. Will those share sales be deemed a “binding contract” or just a “framework agreement”?

The way Twiggy is going his big talking about Fortescue and China might one day be placed in the same category as former Solution 6 CEO Chris Tyler who told his shareholders in 1999 that he could see the company becoming a $100 stock. It never got above $17.

Questionable Excel Coal dealings

Meanwhile, Excel Coal has today announced it’s issuing more shares in an attractive deal to increase its stake in Millenium Coal to 84.6%. Gee, does this explain the sudden 54c surge in Excel’s share price to $7.50 yesterday? Let’s hope ASIC and the ASX take a close look at who was buying.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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