Fortescue Metals Group has pressed ‘go’ on two mid-scale hydrogen developments and a small trial project in WA but surprisingly is not proceeding with the Gibson Island project in Queensland.
Fortescue Metals Group has pressed ‘go’ on two mid-scale hydrogen developments and a small trial project in WA but surprisingly is not proceeding with the Gibson Island project in Queensland.
Ahead of its annual general meeting in Perth today, the company said it planned to invest $US750 million ($A1.15 billion) over the next three years on three green energy and green metals projects, in the USA, Queensland and WA.
It also plans to “fast track” its work on three much larger hydrogen projects, at Pecem in Brazil, Project Chui in Kenya and Holmaneset in Norway.
Today’s update represents a scaling back of Fortescue’s ambitious green energy plans.
The company has previously stated it would make a final investment decision on five green energy projects by the end of 2023.
The three approved projects will have annual production of a modest 20,500 tonnes.
That leaves the company a long way short of executive chairman Andrew Forrest’s previously declared target of producing 15mt a year of green hydrogen by 2030.
Fortescue Energy chief executive Mark Hutchinson indicated a moderation in the group’s growth ambitions.
“Diversity in technology and geography at conservative scales for Fortescue projects reflects our disciplined approach to learning while we do, prior to large scale investments,” he said.
The approved projects include the Phoenix hydrogen hub in Arizona.
The company plans to invest $US550 million in the Phoenix hub, which comprises an 80MW electrolyser and liquefaction facility with production capacity of up to 11,000 tonnes per annum of liquid hydrogen.
First production is expected in 2026.
It plans to invest a further $US150 million in the Gladstone PEM50 project, which it describes as a 50MW green hydrogen project utilising the company’s own electrolyser technology.
It will be developed over two stages, starting with a 30MW electrolyser plant in 2025, with the remaining capacity to be installed in 2028 once water supply is boosted.
It will produce 8,000t of hydrogen per year at full capacity.
A third project to gain board approval is construction of a green iron trial plant at its Christmas Creek iron ore mine in the Pilbara.
It plans to spend up to $US50 million on this project, which it said would use existing green hydrogen infrastructure at the mine site but did not provide details.
Annual production is expected to be 1,500 tonnes, with first production in 2025.
The company said its six projects would provide a “global glide path” for Fortescue Energy and its green hydrogen and adjacent technologies and industries to be firmly established.
The Gibson Island green hydrogen and ammonia project in Queensland, which has often been highlighted as one of Fortescue’s most promising green energy projects, has not obtained final approval.
The company said the project “is requiring further work as Australia struggles to shed its petrostate status and still suffers structurally high green electricity costs”.
The new projects will boost capital expenditure in FY24 by just $US100 million.
As a result, Fortescue Energy’s FY24 capex guidance has been updated to US$500 million (previously US$400 million).
Capex guidance for the group’s mining arm - Fortescue Metals - is unchanged at US$2.8 - US$3.2 billion.
