Fortescue Metals Group has unveiled plans to boost its investment in green energy technology over the next year, despite scaling back its goal of producing 15 million tonnes of zero-emissions hydrogen annually by 2030. The company remains steadfast in its commitment to advancing its green hydrogen projects.
Andrew Forrest, the billionaire founder and executive chairman of Fortescue, has adjusted his ambitious plans to transform the company into a leader in green hydrogen. This adjustment is due to the high costs and significant renewable energy requirements needed for hydrogen production from water.
Recently, Fortescue announced it would cut 700 jobs, pause its 2030 hydrogen target, and merge its green energy and iron ore divisions. These measures aim to streamline operations and reduce costs. Mark Hutchinson, head of Fortescue Energy, reassured investors of the company’s ongoing dedication to green hydrogen, stating, "Our financial discipline always comes first. We will never do projects that are not economically viable."
The company had initially allocated $US300 million ($457 million) for its energy division for the upcoming year. This budget has now been increased to $US500 million ($763 million), with operating expenditure expected to rise from $500 million to $700 million.
Since 2020, Andrew Forrest has been actively promoting green hydrogen, seeking partnerships with governments in regions suitable for large-scale wind, solar, or hydropower production. Green hydrogen is seen as a promising alternative to fossil fuels, especially for decarbonizing industrial processes like steel-making. However, the current production costs remain high, and large-scale viability has not yet been achieved.
Hutchinson highlighted the importance of sourcing renewable electricity at approximately $US30 ($45.80) per megawatt-hour for project viability. In regions where power costs are higher, Fortescue plans to invest in renewable energy generation, including projects in Western Australia and Queensland.
Fortescue will initially focus on four key green hydrogen projects in Australia, the United States, Norway, and Brazil, with additional projects planned for Morocco, Oman, Egypt, and Jordan.
The update on Fortescue's green hydrogen strategy coincides with the company reporting record quarterly exports of iron ore, a crucial raw material for steel-making, from its Western Australian mines. Fortescue Metals' chief executive, Dino Otranto, commented on the achievement: “The team rallied together and went on a war footing to deliver a phenomenal result. More importantly, we have achieved this while maintaining our laser focus on safety, with our Total Recordable Injury Frequency Rate improving to 1.3 for the financial year.”
Additionally, Otranto expressed confidence in the future, stating, “I not only remain confident on the outlook for steel demand and iron ore, but I'm excited for how we will continue to work with China as we decarbonise our value chain.”
Image credit: Courtesy of Fortescue