Andrew Forrest’s Fortescue Metals signs hydro-electric deal in Africa
Fortescue Metals has signed on to conduct a feasibility study into the world’s biggest hydro-electric project in the Democratic Republic of Congo.
Fortescue Metals has signed on to conduct a feasibility study into the world’s biggest hydro-electric project in the Democratic Republic of Congo, as chairman Andrew Forrest pursues his dream of turning the iron ore major into the world’s biggest green energy provider.
The details of the new deal are unclear, but Dr Forrest is believed to have signed an exclusivity agreement with DRC President Felix Tshisekedi over the weekend, giving the company the right to develop a suite of hydro-electric projects in the African nation.
It is believed to include the long-planned $US80bn ($100bn) Grand Inga project, which holds the promise of supplying cheap electric power to much of the African continent.
The Grand Inga is a series of seven potential hydro-electric power stations at the site of the Inga Falls in the DRC.
It has been a dream in the DRC for decades, talked up as the biggest energy project in the world, and a project with the potential to power large sections of Africa with more than 40,000 megawatts of electricity, expanding two smaller existing hydro-electric dams that currently produce about 1800MW of power.
But the Grand Inga is said to come with an estimated $US80bn price tag, and has been plagued with controversy – partly because of the DRC’s poor record on human rights and governance, and partly because of the mega-dam’s likely impact on the environment and local communities.
The World Bank cancelled its support for the $US18bn third stage of the Inga project in 2016, saying the then government of president Joseph Kabila had elected to “take the project in a different strategic direction to that agreed between the World Bank and the government in 2014”.
In 2018 a Spanish consortium, led by engineering giant ACS, struck a deal with Mr Kabila and a group of Chinese companies to design, build and operate the 11GW third stage of the facility, but ACS withdrew from the project in January last year, after Mr Tshisekedi reportedly expressed a preference for an initial smaller, 4.8GW facility, which the consortium did not believe was commercially viable.
The DRC has since been looking for investors for the project, with Fortescue having firmed in Mr Tshisekedi’s thinking since talks in September last year.
Fortescue’s role in negotiations – believed to have been ongoing since at least September last year – over the Grand Inga has already been criticised by non-government organisations, with local media at the weekend reporting on calls by a coalition of civil society groups for more transparency over any negotiations with Dr Forrest and Fortescue over construction of the giant project.
Dr Forrest announced Fortescue’s grand plans to become a global green energy major at the company’s annual shareholders meeting in November last year, outlining plans for Fortescue to eventually produce 235 gigawatts of renewable energy.
Dr Forrest said at the time that he wanted to put Fortescue at the forefront of the coming “stampede” into renewable and green hydrogen and ammonia production. “We know that if we’re going to meet and hit the Paris targets, we’re going to need a 70 per cent reduction in carbon emissions,” he said.
Fortescue has previously said it would direct up to 10 per cent of future profits towards its green energy projects through subsidiary Fortescue Future Industries.
It has also said funding for construction of the projects would come from debt taken against the projects themselves, with no recourse to the iron ore major’s own balance sheet.
Fortescue shares closed on Friday at $23.22.
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