Grok Ventures claims a disagreement between its founder, Mike Cannon-Brookes, and fellow billionaire Andrew Forrest about whether to send power from the $35 billion Sun Cable project to Singapore or use all the clean energy in the Northern Territory was at the heart of its plunge into voluntary administration this week.
All shareholders except Forrest’s Squadron Energy wanted to prioritise the original plan to send power to Singapore via a 4200-kilometre undersea cable, a spokesman for Cannon-Brookes’ Grok Ventures said.
While the company missing recent milestones in its funding agreements may have been the official trigger for entering voluntary administration this week, different views on strategy appear to be at the heart of the problem. The Grok spokesman said providing power to the island state was the company’s marquee project.
“This was the reason the founders started the company, and the reason investors invested in the company, in the first place,” he said.
The spokesman said the cable project was on track to deliver affordable clean energy to Singapore.
“This lighthouse project will likely deliver significant outcomes for the company, attract further investor capital and create a new industry in Australia,” he said.
“Grok’s investment philosophy is to back founders to build real value for investors and to assist the world’s energy transition.”
A source close to Grok said Forrest thought the cable was too risky and had his eye on using the power for a green hydrogen project under consideration by Fortescue Future Industries, the green energy arm of Forrest’s miner Fortescue Metals Group.
“The NT government won’t give any of those projects a licence until they can guarantee they’ve got the energy that’s needed,” the source said.
Squadron Energy did not respond to requests for comment.
Fortescue aims to make 15 million tonnes of green hydrogen a year by 2030 – an ambitious goal for a product that’s current global production is a tiny fraction of the target.
Cannon-Brookes is understood to support providing power to projects in the NT but believed retaining the link to Singapore was vital to attract funding.
In its initial evaluation of Sun Cable, Infrastructure Australia highlighted the business’ private funding and $35 billion in required capital as a key risk, noting “the sheer size of the [capital expenditure] suggests that there is a high risk of delays and in finding sufficient resources”.
Sun Cable is now in the hands of its administrators, FTI Consulting, who will look to achieve the best results for shareholders, which could include a sale or a recapitalisation process.
Forrest’s plan is similar to a large renewable energy project in WA operated by BP.
It was first dubbed the Asian Renewable Energy Hub with plans to send power to Java – Indonesia’s most populous island – but the plan was dropped due to a lack of financially strong customers to support the long-term investment.
BP, which bought into the project in 2022, now plans to use the wind and solar energy to make green hydrogen and supply WA’s Pilbara mining heartland with power.
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Source: Thanks smh.com