Fortescue delays FID on green hydrogen project

Fortescue has delayed a final investment decision on its Gibson Island green hydrogen project for a third time, while its power supplier says a deal remains on foot. 

The Andrew Forrest-led miner says it’s still progressing its proposed Gibson Island green hydrogen and ammonia project in Brisbane after pushing back a FID twice before.

It comes after this masthead revealed the clock stuck midnight on the previous FID deadline of February 28, which was pushed back from the original date of December 31, 2023.

In October Fortescue signed a 25-year power purchase agreement with ASX-listed Genex Power to buy 337.5 megawatts of energy from the yet-to-be-built Bulli Creek solar project in Queensland.

The power purchase agreement was conditional on Fortescue achieving a FID for Gibson Island by the revised deadline, and for Genex to reach financial close on its solar farm project by its later deadline.

Today, Genex told the market the deal remains on foot despite Fortescue’s sunset date lapsing, which triggered a termination right under the power purchase agreement.

"Notwithstanding this, the PPA remains on foot in accordance with its terms, which will require the buyer condition precedent to be satisfied or waived before Genex can proceed to financial close for BCS [solar farm]," Genex said in an ASX statement.

“Genex continues to support Fortescue as needed, as it works toward satisfying the buyer condition precedent as soon as possible."

A Fortescue spokesperson reiterated the same statement it told this masthead in February, being that it was still progressing the project.

“We are progressing our Gibson Island project, but we have more work to do,” they said.

“We are approaching this project with the same financial discipline Fortescue has shown for 20 years.”

Fortescue's proposed green energy project involves the development of a 500-megawatt hydrogen electrolysis facility capable of producing up to 70,000 tonnes of green hydrogen annually on Brisbane’s Gibson Island, which is already home to an ammonia plant.

That ammonia plant, owned by ASX-listed Incitec Pivot Limited, could then be upgraded to use the green hydrogen to produce up to 400,000 tonnes of green ammonia per year.

Commercial production from the proposed project was tipped to commence in 2026.

When the parties agreed to push out the previous deadline, they also agreed to delay Genex’s FID until April 2025.

Fortescue previously stated it would make an FID on five green energy projects by the end of 2023 allowing first production in 2024, a plan that was seemingly scaled back after the miner’s board approved three projects in November.

It pushed ‘go’ on the first three green projects worth a total $1.14 billion, after its board approved FID on its Phoenix hydrogen hub in the US, its Gladstone PEM50 project in Queensland and its Christmas Creek green iron trial commercial plant in WA.

In that ASX release, Fortescue wrote these were three of the first green hydrogen deals ever to be progressed to FID in the US and Australia. It said this was “the start of a pipeline of green energy projects” it was “dedicated to delivering”. 

Details on the possible fifth green energy project are unknown.