Fortescue chief Dino Otranto welcomes better ties with China, reaffirms need for the market
The Fortescue boss says China will always be a ‘long-term critical partner’ and will play a key role in net zero ambitions as he prepares to join the Prime Minister’s China trip this week.
Fortescue Metals sees China playing a major role in the miner’s plans to be net zero by 2030 as chief executive Dino Otranto backed improving relations between Australia and the world’s second largest economy ahead of Prime Minister Anthony Albanese’s visit this weekend.
Speaking at the International Mining and Resources Conference in Sydney, Mr Otranto told delegates that China will always remain a “long-term critical partner” for Fortescue’s iron ore operations and as it looks to pivot into green energies such as hydrogen.
“I’m heading (to China) this weekend to meet the team and to be part of Anthony Albanese’s visit, which for us is a great sign that the relationship is certainly improving,” he said. “We see China as a long-term critical partner for us. It has been the cornerstone to the success of the business over the last 20 years.
“And will remain so for iron ore, but also as we pivot into the new energy sector.”
Appointed as CEO in August following the abrupt exit of Fiona Hick, Mr Ortanto said China would play a major role in driving down the cost of solar, wind and electrolysers, which would benefit its technology arm.
“Which for us will see the breakthrough for everybody to be able to do what we’re doing very quickly. So our relationship with China and Australia is at the fundamental to decarbonisation in the future,” he said.
China has set a target of net zero by 2060 compared to Australia’s 2050 goal.
Fortescue is one of Australia’s most ambitious companies in making the pledge to emit zero emissions with it pledging to have no scope 1 and scope 2 emissions across iron ore operations by 2030 and net zero scope 3 emissions by 2040. Australia’s resource industry has been particularly cautious as they move to capitalise on immediate demand for commodities such as gas and coal and drawing the ire of environmentalists.
“For us in the mining industry, sometimes we take a very conservative lens on how we try to solve our problems,” Mr Otranto said. “We really just have to look a bit to the left, a bit to the right, bringing some diverse folks into their organisation, and all of a sudden, these problems which seemed like Mt Everest, weren’t really Mt Everest.” Mr Otranto added that Fortescue will increase the pace of the rollout of its electric truck fleet after successfully launching the first one in the past few months. He remained optimistic that “green iron” ore represented a significant market opportunity for Fortescue, but said that it would not likely become a reality until renewables became cheaper and the technology was more established.
“As soon as the cost of the renewables gets low, and we see a line of sight for that quite instantly it makes absolute sense to start looking at green iron development,” Mr Otranto said.
“Then there’s three or four different technologies that we’re keeping a close eye on in terms of the reduction of iron that produced the green iron steel. If we can get a breakthrough of that in the next few years, that timeline may be coming forward a lot faster than we first anticipated.”
Iron ore was viewed by Mr Otranto as playing a key role in the path to net zero with steel heavily used in decarbonisation projects such as solar panels or in wind farms. “The amount of steel that’s actually required to decarbonise the planet is huge. If you took the volumes of all of the other critical minerals combined, the amount of steel required would still eclipse it by a tenth of one,” he said. “It’s a unique position to be in as an iron ore supplier as soon as we bring iron ore supplier to feed into a future which we believe is very close in terms of demand for iron ore as the world needs to decarbonise.”
Meanwhile, Australian miners were also sceptical that there would be dual pricing structure for “ESG friendly” commodities from buyers compared to non friendly commodities. IGO chairman Michael Nossa said while it was normal for Australians to think of itself as having a natural ESG advantage because of government rules, it remained to be seen if that “advantage” would be worth going further.
“The big question in all of our minds is whether that advantage and then going further to where your inputs are all carbon neutral and your biodiversity offsets are very, very clearly laid out will yield you a higher price,” he said.
“At the moment that is not clear... Actually paying a higher price for the same commodity that has a lower carbon footprint and a better ESG footprint I don’t think has happened yet. I think it will come. Whether that will compensate you for the extra input that is required or not is a question mark.”
Wyloo Metals chief executive Luca Giacovazzi was also sceptical of a dual pricing structure, adding that it could only happen by government intervention whether through a carbon tax or if it built infrastructure to produce a finished product.
“The third way that I could see government playing a role is you prove the labelling standards on the products. So for example, when you go buy a Tesla, should you know where that nickel’s actually coming from,” he said.