Andrew Forrest flags Fortescue Metals entry to rare earth hunt
The mining giant is hoping to open up a business mining and refining rare earths, says its executive chairman.
Fortescue Metals executive chairman Andrew Forrest has signalled the company hopes to open up a business mining and refining rare earths, as the iron ore giant looks to reshape its mining portfolio around metals needed for a global energy transition.
Speaking at Fortescue’s annual shareholder meeting in Perth on Tuesday, Dr Forrest said the company had “kicked off a global stream of work in South America” aimed at securing access to critical minerals.
Dr Forrest did not give any details of Fortescue’s plans to join Lynas and Iluka Resources in the race to produce rare earth metals, but suggested the company was looking for projects it could use as an integrated part of its push to deliver renewable energy generation and renewable hydrogen across the world.
Rare earths are used in a host of high technology applications, but are essential ingredients in the high intensity magnets needed to make wind turbines.
“We’ve kicked off a global stream of work in South America which secures the critical minerals, the global suite of projects which we have across the world in renewables hydrogen manufacturing, which will kickstart the green energy economy,” Dr Forrest said.
“I’ve just returned from saying really large deposits of these critical minerals.”
Fortescue’s shareholder presentation includes a slide on rare earths as part of its exploration efforts, saying they would be critical to Fortescue Future Industries projects in manufacturing, renewables and hydrogen and that entry into the industry would “bring added value for our shareholders”.
The presentation follow similar comments made by FFI boss Mark Hutchinson after the company’s September quarter production report, when he told analyst Fortescue eventually hoped to integrate its mining and manufacturing operations in a more vertical structure.
Mr Hutchinson said in October the company would initially buy batteries and other renewable energy equipment from existing suppliers, rather than developing its own manufacturing capabilities.
“But we are looking at lithium longer term and batteries and seeing what we can do, particularly with the mining capabilities in the company, and also looking at other alternatives as well like using hydrogen and even pumped storage,” he said.
Fortescue is already exploring for lithium in Portugal, and last year pegged large tracts of WA’s south west region believed prospective for nickel, lithium and other battery and renewal energy technology metals.
The company has previously been linked to the potential acquisition of operating lithium mines such as Greenbushes in Western Australia. It is also exploring for copper in the Americas and Kazakhstan.
Neither Dr Forrest or Mr Hutchinson gave further details of Fortescue’s planned move into rare earths in their presentations to shareholders.
But any move into rare earths could add to an increasingly crowded capital spending budget for the company. Iluka’s WA rare earth refinery is tipped to cost at least $1.1bn, and the company already has a ready-made deposit of high grade feedstock for its refinery contained in waste product from its former mineral sands operations at Eneabba.
Dr Forrest also flagged an acceleration of Fortescue’s spending at its Belinga iron ore project in Gabon, saying its 80 per cent owned subsidiary in the company was “closing in” on the grant of a preliminary mining licence in the country.
Fortescue first signed a deal granting the company access to the deposit in December 2021, and said in August would commit $90m over the next three years on exploration at the giant iron ore project, once owned by BHP.
“The third mapping campaign is happening right now in-country and as we speak significant areas of new mineralisation have been identified. Results are very promising and we plan to commence drilling early in 2023,” Dr Forrest told shareholders.
The mining magnate also flagged plans to tie the company’s executive bonus scheme to Fortescue’s ambitious carbon reduction plans, which target net-zero emissions from its own operations by 2030, and net-zero from its so-called scope 3 emissions – including emissions caused by customers of its products – by 2040.
Dr Forrest did not give further details what portion of Fortescue’s incentive schemes would be tied to emissions reductions targets, but told reporters on the sidelines of the meeting the details would be available to the market shortly.
“We’re serious, we’re going to put the bonus on it,” he said.
“I can tell you it’s going to be very meaningful.”
Shareholders delivered a minor protest vote against a motion to increase the size of the pool available for payment of fees to non-executive directors by $1.5m to $4.5m.
A little more than 9 per cent of shares were voted against the motion at the meeting.
Fortescue shares closed down 1c to $19.20 on Tuesday.