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First Move with Julia Chatterley
The U.S. Economy Slows in the Second Quarter; Taiwan President Confirms Presence of American Trainers; The Oil Majors face Questions over Climate Disinformation. Aired 9-10a ET
Aired October 28, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:16]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Growth grind. The U.S. economy slows in the second quarter.
Taiwan's troops. President Tsai confirms the presence of American trainers.
And fossil fuels fantasy. The oil majors face questions over climate disinformation.
It's Thursday. Let's make the move.
A warm welcome once again to FIRST MOVE this Thursday, and today, our cup runneth over with great guests as we preview the COP 26 Climate Summit this
weekend in Glasgow.
Coming up, the largest financier of climate action in developing nations. That's the World Bank and President David Malpass will be joining us
shortly to discuss. Plus, Andrew Forrest billionaire, Chairman of Fortescue Metals with his game changing idea, transforming an iron ore giant into a
green hydrogen powerhouse. How you ask? Don't worry, I will be asking.
Also the CEO of climate conscious chip manufacturing giant, GlobalFoundries. Thomas Caulfield also joins us testing out the U.S.
investment climate today by going public on the NASDAQ.
U.S. markets copacetic after week on Wednesday, now digesting the latest U.S. growth data, too. GDP rising at a weaker than expected two percent
rate in the third quarter, slowed as you can well imagine by delta variant fears labor shortages, supply chain issues, and rising energy prices. The
question is whether we are past the worst or there is more to come. We will discuss that, too.
Oil, in the meantime, and natural gas easing today after Russian President Vladimir Putin ordered Gazprom to boost energy exports to Europe. You can
see that down across the board. Energy also on the front burner in Asia, too, with Chinese stocks under pressure, particularly coal miners. Beijing
is reportedly considering price controls to curb hot energy prices.
And energetic outrage on Capitol Hill, too. Big Oil in the hot seat accused of spreading disinformation on the perils of fossil fuels. More on that,
too, in just a few moments.
It is a high energy day here on FIRST MOVE. It's always a high energy day here on FIRST MOVE, but let's get to the drivers.
U.S. growth shifting into lower gear. On Capitol Hill, the spending deals still unclear, little for President Biden to cheer, but the good news is,
Christine Romans joins us now to discuss it all.
Christine, we always say this about growth reports. They are backward looking, so it is important as it is to understand what's driving it,
perhaps the bigger question for you and I is, what has changed, particularly consumer confidence, I think, because of course, as we always
discuss, the consumer is key to this economy.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, and it's so interesting in this report, two percent, that is disappointing, but it
is really kind of in line with modern long term trends, isn't it?
We've gone back to a pre-pandemic kind of growth level here, and that's with the delta variant, that's with fading Federal stimulus, that's with a
global supply shock. One economist saying, this is a speed bump in the economic recovery here caused by a global traffic jam, that will at some
point, work itself out.
So a lot of different factors here, a hundred percent rearview mirror, though. If the consumer starts to feel a little bit better about things and
tapping into savings more heading into the Holidays, that could provide some relief going forward.
But again, two percent, historically is a number that we've wanted to see bigger, but kind of just settled into this two percent kind of growth
range. Two percent, after all, we've seen is a disappointment. And what we've seen is a collapse in the economy. Right? And then a sharp bounce
back in the third quarter last year of 34 percent growth and a slow ticking ahead since there, what you're seeing on your screen right now is clearly a
downshift from that very strong fall and spring recovery.
CHATTERLEY: Yes. I mean, you made a great point as well, pre-pandemic, we would have looked at this and gone, okay, this is where we are post-
pandemic or transitioning out of the pandemic where we're disappointed.
But again, to your point, too, we've seen far worse in terms of the expectations coming into this quarter.
I mentioned Biden for two reasons though, one, because I believe he is going to be out on Capitol Hill trying to literally rally the troops and
say we have to get this spending deal done, but two, because also, it fuels the concerns around the risk of stagflation amid rising price pressures,
particularly for families out there that are trying to buy food, that are trying to run their cars.
But also the risk that growth is going in the wrong direction. What do we hear from him today? And where are we on this spending deal, in particular,
Christine because I've sort of given up talking about it because we seem to be going around in circles.
[09:05:10]
ROMANS: Yes, I'll say one thing about this number, this two percent GDP growth number. I really liked the jobless claims number that we saw earlier
today, continuing claims at a post pandemic low, jobless claims down again. So that shows you that the layoffs have slowed and the labor market might
be healing a little bit there.
But this two percent GDP growth, I mean, this could be ammunition for this administration to say, look, we have got -- you've seen the Federal
stimulus -- fiscal stimulus -- waning here, we've got to make the smart investments right now into our workforce, paid family leave. My goodness,
if you've got companies and some senators complaining about a lack of workers, why not give them the most basic, fundamental, rich country right
to be able to have a child or care for a sick relative and not lose your financial security? Right? There might be a moment here for the
administration to use this number to try to justify its big investment into the working class.
On the other side of that, you said the word stagflation. You're going to hear the other side say, look, look, we've got to be really careful here of
stagflation. We can't be throwing more money into this mess.
So, I think both sides could use this number and try to, you know, sing their own tune.
CHATTERLEY: Yes. And one side is more coordinated, unfortunately, for President Biden, so he does need to get his troops on board, and all
coordinated in that message.
Christine Romans, thank you so much.
ROMANS: Nice to see you.
CHATTERLEY: Okay, let's move on. "Seismic risks," quote, in relations between China and Washington. That's what Beijing says would result from
the U.S. pushing for Taiwan to have a greater role at the United Nations.
Meanwhile, in an exclusive interview with CNN Will Ripley, Taiwan's President confirmed a small number of American military trainers are
deployed in the country. Will Ripley joins us now.
Will, this was huge, let's be clear, and congratulations on this interview. But just take us back a few days. President Biden, at the CNN Town Hall
last week promised to come to Taiwan's defense if China attacked. How was that taken? And what was your sense from speaking to the President about
what the nation -- or sorry -- what the island made of that?
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, the White House backtracked that comment even though President Biden was asked twice and
twice he said the U.S. would defend Taiwan because the U.S. has this decades long policy, Julia, of strategic ambiguity, keeping it an open
question whether the U.S. military would intervene if China were to invade this island. It's meant to deter an invasion.
So I asked President Tsai Ing-wen who gave us her first international TV interview in nearly two years what she made of President Biden's remarks.
(BEGIN VIDEO CLIP)
TSAI ING-WEN, TAIWANESE PRESIDENT: People have different interpretation of what President Biden has said.
RIPLEY: Do you have faith that the United States would defend Taiwan, if the Mainland were to try to move on Taiwan?
ING-WEN: I do have faith, and given the long-term relationship that we have the U.S.
(END VIDEO CLIP)
CHATTERLEY: Yes, fascinating, isn't it? And you and I have discussed the political and economic reasons perhaps for support from the United States,
but this interview has made headlines around the world, let's be clear, because as I mentioned in the introduction, the President also confirmed
something publicly that no President has confirmed for what -- I guess, more than four decades -- Will.
RIPLEY: Yes, since 1979, Julia, it was -- it was a question in the news, because there have been reports as of late that a small number of U.S.
troops have from some sort of, you know, branch of service -- it wasn't clear -- who are actually on the ground here in Taiwan training the
Taiwanese military.
We know that the U.S. sells to Taiwan $5 billion -- you know, just last year -- in weapons, and it is kind of been suspected, and, you know, there
have been these reports here and there. They are always backtracked over the years that there are U.S. troops training Taiwanese troops.
But the leader of Taiwan, the President, has never publicly confirmed that until this.
(BEGIN VIDEO CLIP)
RIPLEY: Does that support includes sending some U.S. service members to help train Taiwanese troops?
ING-WEN: Well, yes. We have a wide range of cooperation with the U.S., aiming at increasing our defense capability.
RIPLEY: How many U.S. service members are deployed in Taiwan right now?
ING-WEN: Not as many as people thought.
(END VIDEO CLIP)
RIPLEY: If you look at the Defense Department personnel records, it shows that in 2018, they had officially 10 US military personnel on the island of
Taiwan, and now earlier this year, it was up to 32. That's the official reported staff number. And we know there was a request back in 2018 to
bring more Marines in to help guard the de facto U.S. Embassy here in Taipei, the American Institute of Technology, AIT, and this is something
that is a really, really sticky issue because any permanent presence or semi-permanent presence of U.S. troops in Taiwan would be perceived as an
act of aggression by the Mainland.
[09:10:15]
RIPLEY: So the foreign -- I should say the Defense Minister who spoke to Taiwan's Parliament about this and was questioned about our report earlier
today, he did confirm that there are American military personnel training Taiwanese military personnel, but what he said is, they're not based here,
this is just, you know, a routine cooperation sort of thing, trying to defuse any sort of reaction from Beijing -- Julia.
CHATTERLEY: Fantastic job with this, fascinating timing as well. Will, we look forward to watching more of it later on, on programming, too.
Will Ripley there.
Now, I just want to show you live pictures of U.S. President Joe Biden. He is arriving on Capitol Hill as we speak, as we were mentioning with
Christine Romans there, trying to rally Democrats around his economic agenda and the negotiations, obviously, that are going on with the broader
spending plan, that before he jets over to Europe for discussions with world leaders in the COP 26 meetings this weekend, too. So vitally
important moment for Joe Biden to get out there in front of his caucus, talk to them about the need to coordinate and to agree on simply what's
going to be in this spending bill.
So we'll see what comes of that. But for now, you're looking at live pictures as he walks and attends those Capitol Hill meetings -- vital
meetings today.
Okay, let's move on. Feeling the heat. Executives from ExxonMobil, BP, Chevron, and Shell Oil are all in the hot seat testifying before the U.S.
Congress about alleged disinformation on the climate crisis.
Rene Marsh joins us now. Two questions, Rene, and great to have you with us. The first is, to what extent we see questions on disinformation that
was allegedly provided by these oil majors in terms of the reducing the extent of the impact on climate change as a result of fossil fuel use, but
also what they're doing today to try and tackle climate change. What can we expect?
RENE MARSH, AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Yes, so good morning, Julia. Nice to be with you.
Yes, this is going to be a historic day in the sense that we've actually never seen something like this ever happen before, where you have the heads
of these major oil companies here on Capitol Hill answering these tough direct questions about climate change, the role they played in it, and
whether or not they covered up the dangers about climate change, and as well as the connections between greenhouse gases and fossil fuels.
You talked a lot about these documents and evidence that have come out over the decades that suggest, perhaps a cover up by the industry. I can tell
you that that will be the foundation of much of the hearing today. We expect to see documents, many of them have already been out in the public
sphere already.
But we do expect the democratic Chair of this committee, Carolyn Maloney, to tie everything together that has come out really over the past more than
three decades, and they will be asked about it.
You should also expect to see a different line of questioning, quite frankly, from Democrats versus Republicans. I think from Democrats, you're
really going to see them moving with an assumption that there was an act of disinformation. And on the oil executives' side, I do believe that you're
going to hear a lot of pushback.
From Exxon, for example, I know that they are prepared. The CEO of Exxon, Darren Woods is prepared to point blank say that the company was never
involved in any disinformation campaign, and all of their comments on climate have all been truthful and factual. But again, he will receive
pushback from Members of Congress who are coming with those so-called receipts in the form of documents that show back as far back as 1977 and
1978 where Exxon's own internal scientists had been warning about the dangers of climate change.
So, the question will be, why isn't the company further along as far as their investments in greener energy solutions? So we are expecting a lot of
fireworks here and that is getting underway probably in about another hour or so from now -- Julia.
CHATTERLEY: And we shall wait and watch it. Great to have you with us. Thank you so much for that.
All right, still to come on FIRST MOVE, cashing in the chips. The CEO of chip maker, GlobalFoundries on going public amid a global semiconductor
shortage.
And green dreams: The Australian iron ore billionaire behind Fortescue Metals says green hydrogen will turn his company carbon neutral by 2030.
They'll join us later on the show. Stay with us
(COMMERCIAL BREAK)
[09:17:29]
CHATTERLEY: Welcome back to FIRST MOVE and another bullish batch of Q3 earnings boosting U.S. markets. Futures bouncing as drug maker Merck
delivers an upbeat forecast. We've also had earnings from heavy machinery, from Caterpillar that topped estimates, too.
Ford, also a standout premarket, rising almost nine percent after raising full year guidance. Assurances, too, that the chip shortage affecting car
makers will ease soon and they are managing the supply chain concerns.
Apple and Amazon results are also out after the closing bell today, so, something else to watch for.
Now, the debate around the best ways to protect our planet have never been more potent, and this weekend, the leaders of the world's biggest nations
will be in Glasgow for the COP 26 Summit, and crucial to that meeting the World Bank. They are the largest financier of climate action in developing
countries, and they are planning to provide $25 billion on average annually over the next five years.
The organization also warning why we have to start now and we have to do more. They are warning climate change will push more than 130 million
people into poverty by 2030 and force up to 200 million people to migrate by 2050. Alarming stats.
Joining us now, World Bank President, David Malpass. David, it is always fantastic to have you on the show. Thank you, once again for joining us.
We have much to discuss, as always, but I do want to start with Sudan in light of recent events. The World Bank has decided to suspend cash
disbursements following what's happened, and I know you were the first World Bank President to recently visit Sudan, I think in the last 50 years.
So you know better than most the challenges that the nation faces at this moment. What do we need to understand? And what does it mean for the
Sudanese people that this money now has been suspended?
DAVID MALPASS, PRESIDENT, WORLD BANK: Hi, Julia, thanks for raising it. You know, as we think about development in poor countries, its individual
countries going in different directions. So unfortunately, Sudan has taken a giant step away from the transition that they were doing. They were
transitioning from a dictatorship to a civilian led government.
So, I'm deeply concerned about the developments of this week. We suspended our disbursements and the development of new programs. But for the people
of Sudan, it is critical to get on track and to have a restoration of the transition process.
[09:20:08]
MALPASS: I was there at the end of September. I talked with both the civilian and the military leaders. They stated that they were committed to
this transition. But now, we've got a full break in the progress on transition. So, I'm hoping for restoration, and that's vital for people.
CHATTERLEY: Have you had any outreach?
MALPASS: We've made clear that we can't interact for on our current programs. You know, on Monday, they cut off -- they cut off the internet
and the cell phone systems. And so it's been hard to have outreach. I think they are -- well, I don't know what they're doing. All I can say is, it is
gravely concerning, and you know, there has got to be a restoration of the transition process to the democratic government.
CHATTERLEY: That's an important message. David, obviously, part of that negotiation for Sudan, but it's a much bigger point as well was on the debt
situation in poorer nations. And just to be clear, that debt already rose to a record last year. I believe, you've got the stats, $860 billion, and
you're warning it could worsen as a result of higher inflation, higher interest rates.
We'll talk about measures to address that, but just how worried are you at the World Bank, as you look around the world, and you see the impact of
rising energy prices, rising prices, and nothing about this feels transitory at this moment.
MALPASS: Right. It is a highly unequal situation. You know, the advanced economies are growing per capita income at five percent a year, and the
low-income countries at only 0.5 percent a year. So, that's the opposite of what it should be.
If you wanted the developing world to catch up, which is what everyone wants. To be fair, and to be, you know, more healthy for the people in the
poorer countries, they need to grow five percent -- you know, 10 times faster or a multiple of the growth rates in the advanced economies, and
instead, it is one-tenth as much. So that's concerning across the developing world, and the debt burden just adds to the problem, up 12
percent even while the G20 has been trying to have debt relief processes begin for the low income countries.
CHATTERLEY: It's so important, and I know David, you feel very passionately about this that the debt reduction discussion needs to be had.
It also is vitally important for what we're going to go on to discuss and that is allowing some of these poorer nations room to tackle things like
climate change and invest appropriately, for stronger, more sustainable growth in the future. Which nations are holding these discussions back?
MALPASS: You know, the debt -- the composition as a debt has changed a lot over the last 10 and 20 years, heavily toward China being one of the
biggest official creditor, and on the private sector side more of it there. So it used to be the big creditors were the United States and France and
Japan, no longer -- no longer the case.
So all of the creditors have to get together and recognize that it is in everyone's interest to have a debt relief process for the countries that
don't have sustainable debt. That's particularly important now with the global supply chain problems and the inflation problems, which really hit
the poor around the whole world, but especially in the poorest countries.
CHATTERLEY: Yes. I think you said it there. China is the largest creditor critical to this debate. Let's talk about climate --
MALPASS: And there is a -- you know --
CHATTERLEY: No, please.
MALPASS: I'm going to Rome actually today. I haven't started packing, but I will and I'll be in Rome and the world leaders are there. And I hope they
will talk about this process to get it back on track of having a process toward debt relief. We've got the I.M.F. and I -- Kristalina and I have
proposed the idea of a standstill on debt if countries have hit the wall.
If they have an I.M.F. program and their debt is unsustainable, let's stop taking the money that -- you know, the creditors need to stop taking the
money. But over this last two years, even of the pandemic, the money keeps flowing even from the poorest countries to these relatively wealthier
creditors.
CHATTERLEY: Yes. It's insanity. All nations have challenges, but we have to do something to address this.
David, thank you, actually, for that message and for making that point because it is vital.
Let's adjust to climate because another critical piece of the jigsaw puzzle, particularly because the poorest nations not only have to make the
greatest chunk of investment, but they also feel the impact of climate change most keenly as well for the most part.
Two-thirds of the world's adaption finance in 2020 came from the World Bank and what we're talking about there is simply just adjusting to the facts of
climate change, not even the mitigation steps that are required to try and bring or lower the carbon footprint.
[09:25:05]
CHATTERLEY: You're saying you're going to provide $25 billion on average over the next five years. It is a fraction of what is required. What more
do we need from governments and also, critically, the financial sector and the private sector, too, to tackle this.
MALPASS: Part of it is more resources, and that is from a variety of sources. It can't be that the World Bank alone is doing a quarter of the
burden, which is what's in those numbers that you gave there.
So there needs to be a lot more resources, that means private foundations, and that means corporations. They want to be putting in to this global
solution. You know, it's a global public good. So that means everybody bears some of the burden of it.
Also, we need to be very focused on the big emitters. There has to be a recognition that the giant chunks of the pollution problem comes from a
narrow group. That's, for example, leakage of methane. That alone is a big problem or, in the coal sector, a few of the coal-fired electricity
generators are producing a big percentage of the carbon dioxide emissions.
And so those can be fixed. There has to be a focused effort with a lot of resources.
Another thing I'll mention, Julia, is the incentive structure for the world. As the world community wants to move toward cleaner environment,
there has to be incentives that make -- help countries make that shift.
One of the things going on, I'll just mention, and you know, I think people have to be specific in what they're talking about. Diesel generators are a
big, big problem, because the grid isn't working in a lot of countries. So the rich put in a diesel generator, corporations do that, and those have a
lot of pollution associated with them.
So we need to have a process where this immense amount of resources is marshaled by the world to a focused set of problems that will really have
an impact. That's not really the process that we're in right now. It's more -- it is more unfocused.
CHATTERLEY: Yes. I couldn't agree more, and I think another fact and I'm bombarding our viewers with them today, but it's important from your
reports, developing countries will need an estimated $4 trillion per year in investments up to 2030 to build infrastructure to meet their development
needs.
Just putting the numbers out there and the scale of what is required here in general, even just a piece of this being climate action, I think, shows
that we need concerted action, which is why everybody is meeting in Glasgow this weekend to have the discussion.
MALPASS: Huge, and I'll be focusing on that specific point, the need for a pipeline of projects, that's both mitigation to reduce greenhouse gas
emissions, and also adaptation to help countries be ready for the changes in their outlooks, and both of those costs a lot of money and they have to
be prioritized in terms of how you use the money.
So the World Bank can play a role in the middle of that, helping design the projects and work with the countries so that the incentive structures are
improved. But huge amount of the money has to come from the advanced economies themselves.
CHATTERLEY: I studied it actually back in 2009 when the World Bank issued their first official green bond, and I was looking at the stats and the
latest I can find is around $157 billion worth of green bonds in 2019. We need to be scaling that up to -- and investors actually actively investing
in bonds rather than Central Bank government bonds at times, I think things that we know directly go towards green good.
We have about 30 seconds, David, because I'm very conscious that I have to let you go. Greta Thunberg often says there is a lot of blah, blah around
climate action and sustainability. What does success for COP 26 look like in your mind?
MALPASS: Well, COP 26, I think is bringing people together and there will be a lot of meetings and a lot of talk about things. I hope what it can do
is focus on this idea that you have to have concrete projects that you're talking about in specific countries, as that will change the greenhouse gas
emissions.
If you don't get to that, then a lot of what you're doing is these abstract numbers.
CHATTERLEY: Yes, a lot of talk and not direct action and that is precisely what we need to see.
Sir, I'm going to let you go. You have to go and pack, more especially. Please take what you need, and safe travels and we'll talk to you again
soon.
Thank you for flying the flight here and for the work that you and the team are doing.
MALPASS: Thank you, Julia.
CHATTERLEY: Thank you. David Malpass there, the President of the World Bank.
We're back after this. Stay with us.
(COMMERCIAL BREAK)
[09:33:06]
CHATTERLEY: Welcome back to FIRST MOVE.
U.S. stocks are up and running. Call it a turnaround Thursday. The major averages rebounding after a pullback from record highs in the previous
session. Little investor reaction actually to today's weak GDP numbers. The U.S. economy slowing dramatically over the summer due in part to a weaker
consumer and slower U.S. government spending.
Disappointing numbers perhaps, but no surprise to investors also, as we've discussed. Looking backwards, now, we have to look forwards.
Jobless claims also out today hitting a fresh pandemic low. Encouraging news for the Federal Reserve as it inches closer to trimming monetary aid
perhaps as soon as next week. Other Central Banks also taking action, too. Brazil's Central Bank in focus, raising interest rates by a greater than
expected 1.5 percent, its biggest rate hike in almost two decades as inflation there soars.
In the meantime, chip maker GlobalFoundries ringing the opening bell at the NASDAQ today amid skyrocketing semiconductor chip demand. The Abu Dhabi
controlled company is the third largest chip manufacturer in the world, and the listing values it at a cool $26 billion.
Now, we've been following GlobalFoundries quite closely this year and I've twice asked their CEO about a potential IPO and twice he fobbed me off.
Well, no escaping this time. I asked him what this moment feels like.
(BEGIN VIDEOTAPE)
THOMAS CAULFIELD, CEO, GLOBALFOUNDRIES: Well, third time is a charm, Julia.
CHATTERLEY: Yes.
CAULFIELD: Oh, it's exciting. It's exciting for our shareholders. It's exciting for our 15,000 employees. The reception by just world class fund
managers to the stock. It is a great day for GlobalFoundries.
CHATTERLEY: It is the moment to IPO, as you pointed out. it's a critical moment for the industry, for the global economic recovery, too. We've
talked about your investment plans and ramping them up going forward. What difference is this money going to make?
[09:35:04]
CAULFIELD: No, it's a big part you know we're trying to do our part to alleviate the chip shortage and you know, over the next 2021-2022, we're
going to be spending approximately $6.5 billion in capital expenditures, and at least half the proceeds from this IPO are going to go to fund some
of that growth. So it's a really important part of our growth strategy.
CHATTERLEY: Two questions, I think that arose in the run up to this IPO, and I want to tackle them individually. The first one is a technical point
about your ownership, and you said it in the prospectus.
Mubadala, the State Investment Fund for the UAE is going to continue to have substantial control, which could limit your ability to influence the
outcome of key transactions. I do sound like the prospectus because I'm reading from it. What do investors need to understand about this ownership
and how it may or may not influence your plans going forward?
CAULFIELD: I think they need to understand this is an ownership that is very strategic, a patient investment. And the type of investors we
attracted are long term investors. You know, it's not a matter of getting out as much as bringing others in to help grow this company, and you'll see
them over time in a very transparent and thoughtful way take down their ownership as we build this company and partner with the other long term
investors we brought into this asset.
CHATTERLEY: So you're saying that participation at this moment is a benefit, rather than a risk and people need to see that?
CAULFIELD: I absolutely think so. You need like-minded investors.
CHATTERLEY: Okay. And then their financials, because naturally, people have been pouring over the numbers. They've made comparisons to people like
Taiwanese or Taiwan semiconductor, and they are saying, look, we don't necessarily see a path to profitability, that you're less profitable on a
relative basis to some of your competitors out there.
What can you tell us about the financials, and what we need to understand there, too?
CAULFIELD: Very good. I think our third quarter kind of put that to bed. Financials speak for themselves. You know, we're profitable and we'll be --
as we grow our top line to continue to drive that profitability going forward.
I think, time will tell, and we're very excited about our future and our ability to drive our business.
CHATTERLEY: So in terms of operational breakeven?
CAULFIELD: Excuse me?
CHATTERLEY: In terms of operational breakeven? Just the timing and making that sustainable? Because I get your point about the last quarter, but I
think making that sustainable and then pushing forward. Is that where we are now?
CAULFIELD: Yes, in our most recent filing, we showed our third quarter was operational, positive and that will continue to grow.
CHATTERLEY: Okay, good. And the other thing I want to ask you, we are heading into a weekend of COP 26 discussions. You as a company have said,
look, we're going to reduce our greenhouse gas emissions by 25 percent, obviously, from 2020 to 2030. Are you going far enough?
CAULFIELD: Well, you have to put that in perspective. We're reducing it 25 percent as we grow our manufacturing output, 1.6x, and so, it's a much
bigger decrease in our carbon footprint. And you know, we're not doing this without a concerted investment, we'll spend about $75 million over that
same horizon to create that better carbon footprint.
CHATTERLEY: So, it's not about the magnitude here, it is about the scale with regards growth happening at the same time for the company.
I want to end on a positive note. Irrespective of how the stock trades today, whether it goes up or whether it goes down. What do you want people
to take away from this moment, whether it is investors, some of your suppliers, those that you deal with in the industry, and obviously your
workers, too, who also share in this moment, as well?
CAULFIELD: I want everybody to understand that this chip shortage is painful for everybody in the industry and GF is going to continue to do
their part to be thoughtful partners to our customers and be good corporate citizens as we build this company.
This is just, you know, one milestone for our company as we continue on our journey to excellence.
Julia, thank you very much for having me this morning.
CHATTERLEY: That future begins now. Tom, congratulations today. We'll see you very soon.
CAULFIELD: Thank you.
CHATTERLEY: Thank you.
(END VIDEOTAPE)
CHATTERLEY: All right, coming up after the break, Australia mining tycoon, Andrew Forrest pushes to go green, quite a gamble for an iron ore
billionaire. He's up next.
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[09:42:01]
CHATTERLEY: Welcome back to FIRST MOVE.
With Big Oil accused of climate disinformation and the U.N. warning of a climate catastrophe, the Australian iron ore magnate, Andrew Forrest is
trying to turn the tide. His aim is to transform his $30 billion company into the world's biggest green energy provider with a focus on green
hydrogen.
What is that? Well, green hydrogen is produced using renewable electricity to break water down into hydrogen and oxygen molecules. Blue hydrogen, on
the other hand, comes from superheating natural gas. And critics like Forrest argue that's no better than using fossil fuels.
In a drive to decarbonize, the company is using hydrogen powered drilling rigs and trucks. It wants to turn its mining operations carbon neutral by
2030. All of this, as the company reports profits of $10 billion, thanks to sky high iron ore prices.
Andrew Forrest joins us now. He is the U.K. head of COP 26 in Glasgow.
Wow. Andrew, great to have you with us -- and that was a lot of information. I think, the bottom line is you're a man on a mission and
you're trying to do it -- what -- a decade earlier than some of your competitors. Talk us through your vision here and how you're going to
achieve it.
ANDREW FORREST, CHAIRMAN, FORTESCUE METALS GROUP: Thank you, Julia. Look, what we need is the big heavy emitting industry not just the fossil fuel
sector. The fossil fuel sector has to be held to account, but all their customers, people like me, you know, I burn a billion liters of diesel a
year. That's not even to mention the maritime or bunker oil, which we also burn in our ships.
So, it's companies like us who must turn green and do so with a real plan and then help our customers turn green, so we are already running huge haul
trucks, huge mining coal trucks on green hydrogen. We're commissioning train engines right now running around 70 to 80 percent on green ammonia,
same with ship engines up to almost a hundred percent green ammonia. So, all of these we know can switch to zero emissions fuel.
As I look through the entire industrial supply chain of the world, there is nothing which we can't make with green electricity, green ammonium and
green hydrogen. I'm putting my company out there as the first major heavy milling company to prove that yes, you can save money, you can also make
money by going green. Come on, industrial world, let's make this happen. We are the culprits, we should end the cycles.
CHATTERLEY: Yes, a huge part of your carbon footprint comes in the haulage, which is what you're describing. And I know you got your team
together and you invented the world's first, I believe, hydrogen fuel cell haulage truck and you did it in what -- under four months, I believe. But
there are limitations on how far that can go.
And I think one of the most vocal critics of hydrogen fuel cell technology, just specifically for vehicles is Elon Musk. I mean, I think he said fuel
cell equals fool cell. Why are you so confident that hydrogen is the best way forward?
[09:45:04]
FORREST: Yes, look, Elon is only talking his book. He has factory after factory just set up to do batteries, that's about to become superseded by
the hydrogen fuel cell. He needs to switch and not kind of bait the market with falsity.
CHATTERLEY: That's a bold call.
FORREST: Yes. I mean, can you really blame him? He has brought these huge factories that can only make batteries. He needs to switch really fast to
hydrogen fuel cells, because he knows for sure, all a battery does is take energy out of the grid, which certainly all over the world and in North
America is doing. So he's doing nothing at all for climate change with batteries.
What we need, if you want to drive a million kilometers, a million miles in North America, without a molecule of carbon, a battery won't do it. What
we'll do is drain hydrogen into a hydrogen fuel cell. Now, you can drive a million kilometers without a molecule of methane, a molecule of carbon, and
you can go wherever you want.
So hydrogen really is that future and hydrogen fuel cell for cars is definitely that future.
CHATTERLEY: I mean, Elon Musk is not here to defend himself nor his business. But you have made this important point and the distinction I
tried to make the introduction between a green hydrogen and blue hydrogen, because you've been very critical of those that are saying, look, you know,
even if they are interested in hydrogen, it's the wrong kind of hydrogen that they're talking about.
You've also been pretty critical of the Australian government that's looking at carbon credits for fossil fuel projects for carbon capture. And
you're saying most of the time actually, that doesn't work either. It's a lot of money being invested in the wrong technologies and de facto green
washing, I think as a result.
FORREST: Look, it is, first, it is very timely, it is complete greenwashing. You know, we are so much better off just burning the gas,
burning the coal, oil, and gas in the first place, not obviously (INAUDIBLE) into hydrogen, which is why Elon Musk makes a point, you know,
that is a very inefficient work on hydrogen, making it from fossil fuel, he gets that part right even if he gets hydrogen fuel cells wrong.
What we all know that if you make hydrogen for renewable energy source, (INAUDIBLE) that will never run out, and that has become cheaper and
cheaper as we speak. I haven't noticed that (INAUDIBLE) about energy (INAUDIBLE). There is only one energy which is coming down in price, and
that's hydrogen. So that's the one we ought to back and anything else, I have to tell you, as a side since we started this, it's greenwashing.
You're better off just burning the coal, the oil, the gas and not bothering turning to hydrogen.
CHATTERLEY: I mean, Andrew, you're going to be at COP 26. Is this going to be part of the discussion? Because, you know, as I look around the world,
the point that you're making, I am not sure is misunderstood and there is so much misinformation I think about what's good, about what's bad. How
critical do you think this is to the discussion of how we're investing between now and 2030?
FORREST: Look, you had really great leaders like Margaret Thatcher and George Bush, the first, who warned the world early that global warming was
coming and we needed to act on it. You have this massive fossil fuel lobby even dampening the sound of their voices.
Quick forward 10 years, or sorry, many decades time, you come to today. The same playbook is being played out. Hang on, hang on. Give us a chance to
let us be like the typewriter. Let the typewriter please be saved by the personal computer, give us the chance to transition as the typewriter. Let
us keep polluting your planet furiously. But so long as we're okay, we don't have to change. Just wait until we get to retirement as that busy
little oil and gas executive.
I'm saying actually, technology has changed. Energy has changed. If you subsidize oil, gas, and coal, then you're standing in the way of change and
you're cooking the planet for your kids. You cannot do that with a clear conscience. No matter the arguments about transition, as I've said, no one
asked the typewriter if they're going to get any funding from the personal computer. It just is not is the quest.
CHATTERLEY: But there is an interim period where we still need fossil fuels while we are investing in renewable energies, otherwise, we are going
to face worse energy costs and prices than we are seeing. If we get the transition wrong, never mind cooking our planet in the future, we are going
to have social unrest if people can't afford energy costs in the interim. It is a balance surely, too.
FORREST: Julia, so exactly. So, let's be honest. Let's be absolutely honest. Let's not hide it behind blue hydrogen or gray hydrogen or pink or
yellow, whatever you like. Let's just say, you make 10 to 16 ones of carbon with every kind of hydrogen if you burn it from fossil fuel, that's the
fact.
If you want to say you're clean, why don't you just accept the challenge that you'll only make one ton of carbon or methane for one ton of hydrogen.
Now, the fact is, they're going to struggle to do that.
[09:50:10]
FORREST: So let them just burn the oil, burn the coal, burn the gas. Let's not force anyone to try and make this flat out global warming lie called
blue hydrogen. Let green hydrogen create a huge hydrogen market, give it time. Don't confuse it with lower grade because that's really there to
stamp out green.
And I would say to all of us, if you're interested in making a buck, making a better business, being practical, implementable solution to global
warming, back green hydrogen, and let the fossil fuel sector just live out its life.
CHATTERLEY: Andrew, critical to this discussion of tackling climate change is China, and I think there's a lot of concern out there, particularly as
we see them ramping up coal mining in order to try and wrestle with the high prices that they're facing, too.
There is a concern about their commitment to climate change. You understand the country very well. Clearly, you know, them too. What is the commitment,
particularly on the younger generations in China? Are they committed to a greener future, too?
FORREST: Yes, look. One thing the Communist Party does is listen to its people. We've all got arguments about how they might try and tamper with
the decision making part of that. Ultimately, at the end of the day, Chinese rulers have always listened to their people. And if they don't,
it's at their peril.
The Chinese youth in particular, which we speak to, are all climate and environmental conscious. They absolutely get it. They wonder how the fossil
fuel sector got such a huge, tight grip on the world, when there's such enormous resources which they are building and that's something which I
find a little confusing about China. They are building a huge green resources, they should be telling the world about that. They should be
proud about that.
And the younger generation should know actually, there's a very strong green future in China. It has just got to be encouraged.
CHATTERLEY: Yes. Oh, we have so much more to discuss. Andrew, please come back and talk to us if you can make time as soon as you can after COP 26,
because I want to hear more about your discussions and some of the feedback that you got and the work that you're doing.
And I also really named you incorrectly because you recently got a Marine Ecology PhD. So, I can only imagine the amount of work that took at the
same time as doing what you do for Fortescue. So, Dr. Andrew Forrest, thank you so much for your time and please come back and talk to us soon,
Chairman of Fortescue Metals there.
FORREST: Thank you, Julia.
CHATTERLEY: Thank you, sir. We'll speak soon.
We're back after this. Stay with us.
(COMMERCIAL BREAK)
[09:55:00]
CHATTERLEY: Welcome back to FIRST MOVE with a final look at the action on Wall Street. The major averages higher across the board and inching once
again towards records.
The NASDAQ rising for a fourth straight session, and key ends of course, after the bell today. In the meantime, Ford, a big blue chip winner,
currently up nearly 12 percent. It is raising 2021 guidance for the second time this year, and it will begin paying a regular dividend once again in
the current quarter. Investors liking what they see there.
eBay on the other hand seeing shares falling sharply after warning of weak fourth quarter revenue growth, down over seven percent.
And finally on FIRST MOVE, movie fans on the internet are going crazy about the first trailer for Buzz Lightyear's origin story.
[VIDEO CLIP PLAYS]
CHATTERLEY: Did that dog do a back flip? Oh no, it's a cat.
The Disney Pixar animated adventure follows the real space ranger who inspired the toy from the "Toy Story" franchise. In the film, Buzz is being
voiced by actor Chris Evans. "Lightyear" is due to hit theaters in June 2022.
It was a cat doing a back flip, I believe.
Okay, time for me to buzz off, too. That's it for the show. Stay safe.
"Connect the World" with Becky Anderson is next, and I'll see you tomorrow.
Have a good day.
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