Brazil’s President announces Fortescue will spend $US5bn on green hydrogen project

Andrew Forrest’s Fortescue Energy is yet to formally green light any of its many green hydrogen projects, but Brazil’s president says a $US5bn investment is headed his country’s way.

Andrew Forrest’s Fortescue Energy plans to spend $US5bn on building a green hydrogen plant in Brazil, according to Brazilian President Luiz Inácio Lula da Silva.

The Brazilian President, popularly known as Lula, made the announcement on social media late last week after meeting with Dr Forrest and a team from Fortescue to discuss the project.

A Brazilian government website said the project, at the Port of Pecém in the Brazilian state of Ceará, would be capable of producing up to 837 tonnes of hydrogen a day – or about 300,000 tonnes a year – using 2.1GW of renewable energy.

Fortescue first inked an agreement to examine hydrogen production at the port in 2021, tipping the cost at about $US6bn, and said a year ago it was prioritising the precinct as an option for one of its first green hydrogen production hubs.

Fortescue has not made any disclosure to the Australian securities exchange about having given the project the green light.

Fortescue also posted a picture of the meeting on its social media pages, but did not give a figure on the cost of the likely development.

“Today, our chairman met with the President of Brazil, Lula da Silva, to discuss Fortescue’s Green Hydrogen Project in Pecém, Ceará. The project aims to produce 837 tons of green hydrogen per day and will contribute to the decarbonisation ambitions of Brazil and the world,” the company said on the weekend.

Speaking to analysts after delivering the company’s quarterly production report in late October, Fortescue Energy boss Mark Hutchinson said the company expected to take projects in the United States, Norway, Kenya, Brazil and Australia to the Fortescue board for a final investment decision by the end of the year.

Mr Hutchinson did not give any details of costs or timelines, but reiterated Fortescue’s long-held position it would be able to find co-investors for its green energy projects rather than using the mining giant’s own balance sheet to fund their construction.

“There are pockets of concessionary finance which we are working very hard on. For example, in the United States, there’s funding from the Department of Energy, Brazil you have some of the local funders there, the development banks, the same in Kenya as well,” he said.

“As I think through funding, the first port of call is those development banks and that concessionary financing because obviously it’s going to be better for the projects.”

Fortescue has been approached for comment.

President Lula’s announcement came after Fortescue’s green energy plans in Australia hit a bump in the road last week, after a major supplier of electrolysers for its planned Gibson Island green ammonia facility, Plug Power, took a battering on the US market after it warned of potential financial collapse if it was not able to find a fresh cash injection.

The Gibson Island plant is a joint venture with Incitec Pivot. Acting Incitec chief executive Paul Victor told The Australian on Monday the company was not concerned about Plug’s going concern warning last week.

“There’s no change to our plans and we are moving quite swiftly towards making a final investment towards the end of this calendar year,” he said.