As Fortescue Metals Group sets its sights on a greener energy future, the company is strategically recalibrating its ambitions in the realm of green hydrogen.
Recent investor briefings shed light on Fortescue’s risk appetite in the green energy sector, offering insights into the company’s evolving strategy and its commitment to a sustainable future.
Five Projects, One Vision
Fortescue has affirmed its commitment to finalize investment decisions on five green energy projects by December 31. These projects, spread across the globe, are poised to play a crucial role in Fortescue’s green energy portfolio. Let’s take a closer look at these initiatives:
- Gibson Island, Queensland: This project aims to produce 385,000 tonnes of ammonia annually for export, with a focus on the green ammonia market.
- Phoenix, Arizona: Located in Phoenix, Arizona, this endeavor sets its sights on producing 12,000 tonnes of hydrogen each year, primarily for the mobility sector.
- Ammonia Plant in Brazil: Fortescue’s plans include a 300,000-tonne-a-year ammonia plant in Brazil, targeting the European market.
- Green Ammonia in Norway: With an eye on Europe, Fortescue is planning a facility in Norway that will supply green ammonia.
- Kenyan Green Ammonia: Utilizing geothermal energy, Fortescue intends to produce green ammonia in Kenya.
Green Ammonia Advantage
Fortescue’s approach is pragmatic; it acknowledges the challenges associated with transporting hydrogen and, therefore, plans to initiate four out of five projects as green ammonia ventures. Green ammonia is easier to transport than hydrogen, making it a strategic starting point for the company.
However, Fortescue remains unwavering in its commitment to green hydrogen as the ultimate goal. This aligns with the global pursuit of hydrogen as a clean and sustainable energy source.
Fortescue is leaving no room for ambiguity in its green energy projects. All five endeavors are slated to come with fixed-price take-or-pay contracts. The company plans to hold equity stakes ranging from 25 percent to 50 percent and intends to sell the remainder to sovereign wealth funds and other strategic partners.
In a briefing, Glyn Lawcock from Barrenjoey highlighted that Fortescue aims for 50-60 percent debt funding and a mid-teens rate of return.
The investor briefings have seen the participation of key Fortescue figures, including newly installed metals chief executive Dino Otranto, Fortescue Future Industries (FFI) boss Mark Hutchinson, and acting chief financial officer Apple Paget. These discussions come in the wake of recent leadership changes within the company.
Notably, Fortescue’s former CEO, Fiona Hick, parted ways with the company after just six months, followed shortly by CFO Christine Morris.
Fortescue’s journey into green energy extends beyond its core operations. The company engaged in discussions with Rio Tinto last year, exploring common ground on green hydrogen and its potential to replace fossil fuels.
While Fortescue is actively pursuing green energy projects worldwide, challenges and uncertainties persist. Progress on the massive Grand Inga hydro power project in Africa, for instance, appears to have stalled despite earlier enthusiasm.
The Kenyan ammonia project holds the promise of supplying locally made fertilizers, potentially reducing reliance on Russian products produced using fossil fuels.
Despite facing political upheaval in Gabon, where it operates its first overseas iron ore mine, Fortescue continues to explore opportunities in Africa.
As Fortescue Metals Group charts its course towards a greener energy future, it finds itself at the intersection of ambition, pragmatism, and market realities. The company’s green energy evolution will undoubtedly impact the global energy landscape and the broader shift towards sustainability.
