Fortescue Metals (ASX:FMG) will commit more than $A1.1 billion ($US750 million) to its first three projects on the list of ambitious plans to become a major force in hydrogen and renewable energy. The company unveiled the final investment decisions ahead of its annual meeting in Perth on Tuesday.
The major spend will be $US550 million on the Phoenix Hydrogen Hub in the US. The others are the Gladstone PEM50 Project in Queensland and a so-called green iron trial plant at Fortescue’s Pilbara iron ore mines in WA. These are three of the five projects the company indicated in January would be approved by the end of 2023.
Fortescue said the other two – the Gibson Island Green Hydrogen (a joint venture with Incitec Pivot) and Ammonia Project in Queensland – require "further work as Australia struggles to shed its petrostate status and still suffers structurally high green electricity costs."
Other projects were “fast-tracked” by Fortescue: Pecem in Brazil, Project Chui in Kenya, and Holmaneset in Norway. These represent geographical and technological diversity to establish a global glide path for Fortescue Energy and its green hydrogen and adjacent technologies and industries to be firmly established, according to the publicity blurb issued by the iron ore miner.
Fortescue, the world's 4th biggest iron ore exporter, said it now expects capital expenditure of $US500 million for the Fortescue Energy unit this fiscal year (ending June 30), up 25% from a prior estimate of $US400 million. The company said its 2023-24 capital expenditure estimate for its iron ore businesses remains unchanged at $US2.8 billion to $US3.2 billion.
The Phoenix Hydrogen Hub in the US will produce 11,000 tonnes of liquid green hydrogen a year for the California market from 2026, taking advantage of the tax breaks and incentives in President Joe Biden’s Inflation Reduction Act designed to stimulate green energy investment.
The company will also fund a 50 megawatt green hydrogen technology project in Gladstone, Queensland, and build a trial commercial plant to make green iron in Western Australia at the company’s Christmas Creek mine.
"Utilising existing green hydrogen and green electricity from solar generation, hematite and magnetite ore production capacity, and existing infrastructure and technical capacity, an investment of up to US$50 million has been approved to construct a Green Iron Trial Commercial Plant at Christmas Creek. Annual production is more than 1,500 tonnes, with first production in 2025,” Fortescue said.