That an iron ore miner is looking to buy a collapsed airline is testament to the different ways the coronavirus is affecting different sectors. The pandemic is not necessarily a financial disaster for everyone, particularly those tied to China.
In contrast to the miners, where the cash continues to roll in, the travel sector has been devastated by the coronavirus crisis. None have felt the brunt more than Virgin Australia.
The nation's number two airline was put into voluntary administration two weeks ago after it was essentially grounded, with no income to service its A$6.8 billion ($7.2b) debt.
Australia needs a second airline to keep Qantas in check and the Government decided to take the risk of letting Virgin fall into administration in the hope a cashed-up buyer would pick it up and reinvigorate the airline.
So far, that looks to be paying off, with up to 20 different parties expressing interest.
Forrest has spoken to investment bankers at Credit Suisse about a potential tilt for Virgin, potentially teaming up with his friend Richard Branson.
But what's really captured his attention is China.
Forrest, the founder and chairman of West Australian iron ore miner Fortescue Metals Group, is concerned about the deepening rift between Australia and China over Australia's calls for an independent inquiry into the origins of the Covid-19 virus.
China has hit back, threatening economic retaliation and to stop buying Australian food, education and minerals.
Prime Minister Scott Morrison is talking tough, stating that the relationship is "mutually beneficial", but that's an overly optimistic view, to say the least. South America is full of iron ore and lithium, the UK, Canada and New Zealand also offer quality export education, and New Zealand and South America are major food and dairy exporters.
Forrest — whose A$8b fortune relies on good relations with China — appears to share those concerns and appears eager to demonstrate to the Chinese whose side he is on.
And so to Melbourne last Wednesday, when Health Minister Greg Hunt and Forrest appeared side by side at a press conference to announce Forrest's donation of 10 million coronavirus testing kits he had sourced from China.
He took Hunt and, indeed, the entire Australian Government by surprise by bringing along China's consul-general for Victoria, Long Zhou, and inviting him to speak at the podium alongside Hunt, catching Hunt off-guard and embarrassing him. Zhou took the opportunity to praise Beijing's handling of the crisis.
Senior members of the government played down the incident, leaving backbenchers to articulate something probably closer to the Government's true feelings.
"This guy drops out of the sky in his private jet and enables the Chinese Communist Party to ambush a commonwealth press conference. Yeah, we're not happy," said Liberal MP Andrew Hastie.
The importance of China to Forrest was underscored later in the week when Fortescue released its most recent production updates. While other businesses were either slashing their earnings forecasts or throwing their hands up in the air and not making any forecasts because they don't know how bad things will get, Fortescue continues to thrive.
Fortescue achieved record iron ore production in the March quarter, up 10per cent from the year before. That production levels were maintained and actually increased was due to Fortescue and other WA miners introducing safety procedures and negotiating exemptions with the Government to keep digging throughout the crisis. It helps that China kept producing steel throughout the health and economic crisis; in fact, production rose slightly.
Forrest has been joined by other business leaders — many with their own economic interests tied to China — saying the Government needs to mollify the economic superpower. The question for the Government is one of sovereignty. How much are we prepared to let China push us around for the sake of our economy?
It's a question that will grow more acute as the world emerges from the coronavirus medical crisis but continues struggling with the economic fallout.
China is pushing ahead with its giant Belt and Road Initiative, a vast collection of development and investment projects that will stretch from East Asia to Europe, significantly expanding its economic and political influence. And with the initiative to cost as much as US$1.3 trillion, it's going to be tough for cash-strapped governments to resist the lure of giant China-sponsored infrastructure projects that will create income and jobs.
This won't be no-strings-attached largesse from China. That's what Australia and other governments will need to carefully consider.
