Fortescue’s US move a sign President Biden’s subsidies are attracting Australian majors
The rust-belt manufacturing city of Detroit is the new home of Fortescue’s green technology ambitions, thanks to generous support from US state and federal governments.
Andrew Forrest says Fortescue’s plans to establish a manufacturing centre in the city of Detroit will help launch the company as a significant supplier of electrolysers, batteries and fast chargers in the US market, and not just supply the company’s own green energy projects.
While Fortescue is also building an electrolyser plant at Gladstone in Queensland, the US facility will be far larger in scope than anything planned in Australia, with the support on offer from the Michigan state government and generous US federal subsidies the latest encouragement for Fortescue to look beyond Australia for its green energy future.
This year Fortescue announced it was building a manufacturing plant in Britain to meet demand for batteries and other equipment designed by its WAE division.
Dr Forrest told The Australian on Friday the centre would not just supply Fortescue’s own US projects, which are still to receive a final investment decision from the company, but would eventually offer goods for sale across the booming US green energy equipment market.
The plant, in which Fortescue will initially invest $US35m, will manufacture the company’s own brand of electrolysers and battery packs for heavy haul trucks and other electric vehicles designed by Fortescue’s WAE division – as well as operate as a manufacturing centre for its other projects as they came on line, he said.
“The Detroit facility is actually in the very major facility which started the Model T, for a bit of historical context. And it is to build electrolysers, fast chargers, batteries, etc – everything which we need in the ecosystem of Fortescue very quickly, but what the ecosystem of a transitioning world also needs,” Dr Forrest said.
“We cannot keep up with demand for WAE batteries, their battery intelligence systems. You know, they’re just not keeping up.”
The Fortescue executive chairman said he could not give a time frame for the centre to be up and running, but said the company planned to push as hard as it could to establish a manufacturing footprint in the US.
“We have the demand right now. It’s a major refurbishment, it’s a huge building. And we’ve just got to set up the manufacturing centre,” he said.
“I want the building spick and span. I want it to be highly presentable to customers. And I want customers to be able to walk down the production showroom floors and notice not one speck of dust. All of that’s got to happen.”
Dr Forrest said the company would receive support from the Michigan government to establish the plant, as well as benefit from federal government grants and tax credits for the manufacturing of battery modules, on offer for up to $US10/kWh.
The manufacturing move is Fortescue’s latest push into the US, after the company this week announced the establishment of a New York-headquartered asset management arm to help it attract investors into its global green energy projects.
Managing partner Robert Tichio told The Australian the new company, wholly owned by Fortescue, would be a one-stop shop for would-be green investors who wanted to take a share in the dozens of projects Fortescue is looking to build across the world.
At the same time it would help the company avoid paying fees to external asset managers that would otherwise direct investment into the company’s projects.
“There are going to be some investors that want what I would call general partner discretion – for example, a smaller mid-sized pension fund in the United States, they’re not going to want to evaluate a multi-hundred million dollar direct investment and they’re going to put their money with allocators who may put their money in a Fortescue project.
“Then there will be allocators – large pension funds, large endowments, large sovereigns – that all want to go direct. All they want to do is skip the manager and they want to have bespoke individual relationships with project owners or corporates, and that’s what Fortescue Capital is going to look to serve.”
Mr Tichio said the new entity was designed to establish direct relationships with funders.
“Fortescue sees the wall of capital formation … has been even outside the bounds of the capital availability for even a company as large and as profitable as Fortescue,” he said.
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