Australia’s Fortescue Metals Invests USD6.2bn in Decarbonizing Iron Ore Business

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Australia’s Fortescue Metals Invests USD6.2bn in Decarbonizing Iron Ore Business

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Australian iron ore company Fortescue Metals [FMG:AU] announced a plan to invest about USD6.2bn over the next decade to decarbonize its iron ore operations and eliminate the use of fossil fuels from its business by 2030, as reported by Bloomberg on September 20. Fortescue Metals will spend USD3.2bn to build two to three gigawatts (GW) of renewable energy generation and battery storage projects, USD1.3bn to develop a fleet of low-carbon vehicles, USD900m on new infrastructure, and USD800m on demand response. The company seeks to replace diesel at its mines with renewable energy and realize ‘real zero’ emissions, which means using no fossil fuels and no carbon offset tools.

Fortescue Metals expects the USD6.2bn investment to save around 700m liters of diesel and 15m gigajoules (GJ) of gas per year by 2030, preventing the emission of 3m tons of carbon dioxide equivalent (CO2e). Given the current prices of diesel, gas, and carbon credits, the Australian firm estimated that it could save USD818m in operating costs per year from 2030 through its investment in renewable energy and decarbonization. According to Fortescue Metals CEO Mark Hutchinson, the firm will ramp up its green hydrogen production capacity to 15m tons annually by 2030 to meet the vast demand for clean energy. Hutchinson also forecasted that the company’s energy unit will eventually exceed the iron ore business in value. Under Australia’s National Hydrogen Strategy published in 2019, the country aims to become a major player in global hydrogen production and trade by 2030.