Fortescue Metals Group (ASX:FMG), the iron ore giant, has taken significant steps towards its green energy aspirations by announcing investments worth US$750 million (A$1.14 billion) in Australia and the United States.
Executive chairman Andrew Forrest revealed final investment decisions on two green hydrogen projects and a green iron project, despite facing shareholder dissent over executive pay at the group's annual meeting.
Fortescue is allocating the US$750 million to three key projects:
- Phoenix Hydrogen Hub (US) - A substantial investment of US$550 million is set for building an 80-megawatt electrolyser and liquefaction plant, with a capacity of up to 11,000 tonnes a year of liquid green hydrogen. This move capitalises on the attractive green investment market in the US, bolstered by the Biden administration's Inflation Reduction Act.
- Gladstone Green Hydrogen Project (Australia) - A US$150 million investment is earmarked for a 50-megawatt green hydrogen project in Queensland. It will leverage Fortescue's proprietary membrane technology and renewable energy from Australia's National Energy Market.
- Green Iron Trial Plant (Australia) - Fortescue plans to invest US$50 million in a green iron trial plant at its Christmas Creek iron ore mine in Western Australia, furthering its commitment to sustainable mining practices.
While these investments signal Fortescue's dedication to green energy, uncertainties loom over the Gibson Island project in Queensland due to high green electricity costs.
Forrest defended the company's executive payments that incurred a shareholder "first strike" and emphasised the goal to decarbonise the Pilbara by 2030 without relying on offsets.
Fortescue's energy division has increased its capital expenditure guidance from US$400 million to US$500 million this financial year. It expects mining capex to be unchanged at between US$2.8 billion and US$3.2 billion, which will be largely aimed at decarbonising the mining operations.
The company aims to achieve significant milestones in the coming years, with construction on the Phoenix Hydrogen Hub expected to commence in the second half of 2024, targeting liquid hydrogen production by mid-2026. Additionally, the Gladstone Green Hydrogen Project is set to begin construction in 2024.
These investments underscore Fortescue's commitment to becoming a major player in the green energy sector while contributing to a more sustainable future.