Fortescue commits to five green energy projects in 2023
Fortescue Future Industries will reveal the cost and timing of at least five green energy projects this year, chief executive Mark Hutchinson says.
Fortescue Metals Group has set a target of at least five green energy endeavours by the end of the year and its Brisbane joint venture with Incitec Pivot is likely to be its first Australian project.
Fortescue was under pressure for much of 2022 to give investors some clarity on the cost and timeline for any of the dozens of massive green energy and hydrogen projects it has earmarked.
The company is yet to give a firm commitment to any of the projects for which Fortescue Future Industries has signed early stage deals, but FFI chief executive Mark Hutchinson on Friday said it was confident it could make a final investment decision on five this year.
Mr Hutchinson told analysts on Fortescue’s December quarter production call that the company’s discussions at the recent World Economic Forum in Davos had confirmed both funding and demand was available for hydrogen projects.
“We’re going to go for five projects for final investment decision in 2023. And this is important because something we really learned in Europe in the last few weeks is that the world is looking for us to do this at scale; this is not a science project,” he said.
Mr Hutchinson conceded that FFI still had an “enormous amount of work to do” to meet that goal, but said the company was moving quickly.
But only one of those five appears to be in Australia. Its joint venture with Incitec Pivot to repurpose the mining services company’s Gibson Island fertiliser plant in Brisbane is the most likely candidate.
Mr Hutchinson nominated projects in the US, where Fortescue plans to redevelop other former coal and industrial hubs, as another prime candidate due to the generous incentives and subsidies on offer from the Biden administration’s Inflation Reduction Act.
“Gibson Island is going to be in the mix early on in the plan, but we also have projects in the United States moving very quickly. That market is developing very quickly and it’s just a huge opportunity there for us to step in with customers and supply green hydrogen,” he said.
“We’re looking at Europe and Northern Africa as well. So the first few projects you’ll see out of those locations.”
Mr Hutchinson did not provide details of any of FFI’s most advanced projects, but his comments suggest those that were once high priorities have dropped down the list.
Negotiations over a power and water deal for FFI’s Bell Bay hydrogen and ammonia plant in Tasmania – originally due for a final investment decision by the end of 2021 – have been stalled for more than a year.
Mr Hutchinson also did not mention FFI’s ambitious plans in South America, where the company in late 2021 flagged construction of a $US1.2bn pilot green hydrogen plant in Argentina as a prelude to a $US8.4bn renewable energy and hydrogen hub.
The FFI boss also dismissed talk about the withdrawal of the company’s partners from its electrolyser manufacturing facility in Gladstone, saying Fortescue was happy to go it alone on the plant.
FFI was originally developing the plant with US hydrogen company Plug Power, but this week Plug chief executive Andrew Marsh told analysts and investors the company was not convinced of the economics of the project and believed “we could do better”.
Mr Hutchinson said he believed Plug had made the wrong decision and Fortescue was happy to go it alone in the $130m facility, to which the Queensland government has committed $15m.
“I believe we can get the best economics out of the electrolyser facility, Andy has a different view. That’s fine, bring it on,” he said.