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Mining giant Fortescue says it will lift spending on green energy technology over the next year and has reaffirmed its commitment to developing zero-emissions hydrogen despite scaling back ambitions to produce 15 million tonnes of the fuel a year by 2030.
Billionaire Andrew Forrest, Fortescue’s founder and executive chairman, has had to hit the brakes on the speed and scale of his plans to diversify the world’s fourth-largest iron ore miner into a green hydrogen superpower, blaming the high cost and the vast amount of renewable energy required to split hydrogen from water.
Andrew “Twiggy” Forrest, the chairman and biggest shareholder of iron ore miner Fortescue Metals Group, is embarking on a major push into clean energy.Credit: Dominic Lorrimer
Perth-based Fortescue last week announced it would slash 700 jobs, put its 2030 hydrogen target on hold and merge its green energy and iron ore divisions to reduce duplication and costs.
However, in a briefing on Thursday, Fortescue Energy boss Mark Hutchinson reaffirmed to investors that the company was “steadfast” in its commitment to scale up and commercialise green hydrogen – the name for hydrogen made using an electrolyser powered by renewable energy to ensure the end product is emissions-free.
Fortescue had initially allocated capital expenditure of $US300 million ($457 million) for its energy division for the coming 12 months, but that figure was increased to $US500 million ($763 million) on Thursday. The division’s operating expenditure would rise from a maximum of $500 million to $700 million, the company said.
“I want to make it really clear: Fortescue is steadfast in our commitment to green hydrogen,” Hutchinson said. “However, our financial discipline always comes first, and we will never do projects that are not economically viable.”
Since 2020, Forrest has toured the world promoting the virtues of green hydrogen and seeking to partner with governments that have areas suitable for producing the vast amounts of wind, solar or hydropower required.
Green hydrogen is considered a promising future fuel due to its potential to displace fossil fuels and help decarbonise industrial processes, such as steel-making, that cannot be simply electrified. However it remains prohibitively expensive to make and is not yet viable at scale, with most of today’s hydrogen still made using fossil fuels.
Hutchinson on Thursday said it had become apparent that the ability to source renewable electricity at a cost of around $US30 ($45.80) a megawatt-hour was essential for a project to be viable.