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Billionaire mining magnate accused of dividing indigenous communities

One of Australia's richest men has been accused of dividing indigenous communities and paying off traditional owners to secure cut-price access to their land.

An earth mover receives a load of iron ore from a surface miner in the mine pit at Fortescue Metals Group's Cloudbreak operation in the Pilbara region of Western Australia.
An earth mover receives a load of iron ore from a surface miner in the mine pit at Fortescue Metals Group's Cloudbreak operation in the Pilbara region of Western Australia.

SYDNEY // One of Australia's richest men, the multi-billionaire mining magnate Andrew Forrest, who has committed himself to improving the lives of Aboriginal people, has been accused of dividing indigenous communities and paying off traditional owners to secure cut-price access to their land.

Mr Forrest, whose Fortescue Metals Group (FMG) mines iron ore in the resource-rich Pilbara region of north-western Australia, has been trying for years to strike a deal with one of the local tribal groups, the Yindjibarndi people. Beneath the red dirt of the Yindjibarndi's traditional lands lie an estimated 2.4 billion tonnes of iron ore, worth hundreds of billions of Australian dollars.

Negotiations with the group representing landowners, the Yindjibarndi Aboriginal Corporation (YAC), broke down after it rejected Fortescue's offer of 4 million Australian dollars (Dh15.24m) a year, plus jobs, training and housing worth 7m dollars annually. The YAC says it is far less than the standard mining industry royalty of 0.5 per cent of the value of ore extracted.

In 2011, a splinter group appeared: the Wirlu-murra Yindjibarndi Aboriginal Corporation (WMYAC), composed of elders who wanted to work with Fortescue. But two years later, a deal has yet to be struck, and the Yindjibarndi - who live mostly in the small, ramshackle town of Roebourne - are bitterly divided, with families split down the middle.

The company rejects claims by the YAC's chief executive, Michael Woodley, that it instigated and created the new group. However, it admits to funding a meeting in Roebourne which voted for the WMYAC to take over negotiations, while refusing to comment on reports that it paid 500 dollars to every WMYAC member who attended, bussing some in from out of town.

Mr Forrest grew up on his family's cattle station in Pilbara, a wild and remote region where summer temperatures regularly reach 45°C and the few towns lie hundreds of kilometres apart, in an ancient landscape of sandhills and spinifex grass. In recent decades Pilbara has become a hive of mining activity, with huge quantities of iron ore, in particular, dug up and shipped to Asia.

The iron ore industry was for years almost a duopoly, dominated by the international mining giants Rio Tinto and BHP Billiton. Then along came Mr Forrest, who sent his first shipment to China in 2007 and soon afterwards was named Australia's richest man, with a fortune valued at 9.4bn dollars. (Thanks to a drop in the share price, he is now worth "only" 3bn dollars.)

Mr Forrest, who grew up among Aboriginal people, said he was determined to help break the cycle of Aboriginal poverty and welfare dependency. He set himself the goal of securing pledges from big corporations of 50,000 jobs for indigenous people, and founded Generation One, a not-for-profit organisation aimed at improving education, training and job opportunities.

His mining career, which began with an attempt to establish a nickel mine in the 1990s, has been beset by a series of controversies, however. Sued over the failure of that mine, he was described by the judge hearing the case as "quite untruthful". Last year, he escaped being banned as a company director after the High Court overturned a ruling that he had misled FMG investors.

Most damagingly, perhaps, he has been dogged by allegations that he uses "divide and rule" tactics with Aboriginal communities - courting receptive individuals or factions and persuading them to sign land access deals. Minara Resources, to whom he sold his first company, Anaconda Nickel, said in a statement to Financial Review magazine in 2006: "There was an awful lot of cash passed around to have groups sign off."

Mr Forrest - who is now FMG's non-executive chairman, but was involved in the talks with both the YAC and WMYAC - has always denied any impropriety in dealings with landowners.

According to a filmmaker, Frank Rijavec, who has spent extended periods in Roebourne, the splits appeared after the company set up an office in the town. Mr Woodley says: "We've gone from being a happy, vibrant community that cared for and supported each other to finding ourselves in a very dark place where we don't even talk together on the street."

He claims Fortescue are "pulling the strings" of the WMYAC - an assertion backed by Kerry Savas, a former lawyer for the Wirlu-murra, and, late last year, by its own chairman, Bruce Woodley, who is Michael's uncle.

"The group was set up by an interested party that wants a cheap [land] deal over the line," says Michael Woodley. "Fortescue's behaviour has been disgraceful."

Allery Sandy, an artist, Yindjibarndi elder and spokeswoman for the WMYAC, believes Bruce Woodley was ill when he spoke out and "not right in his state of mind".

"None of the white men had anything to do with it [setting up the group]," she says. "We got no respect from the other lot; we were put down and had no voices. So we just gave up and said, enough of the arguing, we want to get on and make a better future for the next generation."

At the heart of the row are philosophical differences over the best way to address Aboriginal disadvantage. Fortescue maintains that providing training and jobs is of longer-term benefit than distributing cash. Others, such as Michael Woodley, argue that many communities are not interested in mining and want to use the revenue to set up their own enterprises.

FMG's chief executive, Nev Power, says the company is committed to developing relationships with indigenous communities, and has already signed seven agreements with landowner groups. It employs 1,000 Aboriginal people in the Pilbara - about one-tenth of its workforce - either directly or via contractors.

"To those people who say just give us the cash and we'll set up our own businesses, I say show me the model that's worked and we're happy to come and support that. There's no evidence in any indigenous community I'm aware of where an enterprise or company has been able to provide that level of employment [provided by the mining industry]."

Fortescue admits paying the fees of consultants and lawyers engaged by the WMYAC, but says that is normal practice in the industry. It declines to say whether is bankrolling two court actions which the group has brought against the YAC. Although negotiations have stalled because of those cases, the company - as is its legal right - has already begun mining on Yindjibarndi land.