Fortescue Making Major Move into Green Energy

Last week the Sydney Morning Herald featured this headline: ”Fortescue to take on fossil fuel giants with expansion into green energy.” Bold words, but it turns out the headline does not overstate Fortescue Metals Group’s ambitions. “FFI will finance, develop and operate renewable energy projects including green hydrogen and green ammonia plants,” the accompanying story says. “FFI would aim to build 235 gigawatts of installed energy capacity.”

Fortescue is an Australian company whose main business is the extraction of iron ore. Its revenues in fiscal 2020 were USD $12.8 billion.

So how big is 235 GW? Several benchmarks have emerged this year. In July 2020, Air Products, ACWA Power, and NEOM made a splash when they announced their intention to build a $5 billion green ammonia plant in Saudi Arabia. Stated capacity: 4 GW. Two months earlier, reports surfaced about a project dubbed the Asian Renewable Energy Hub (AREH) that would produce green ammonia in Western Australia. It took a few weeks for the world to take note, but by August (when Ammonia Energy’s report on the initiative appeared), it was clear that AREH represented a breakthrough in ammonia energy ambition. Stated capacity: 15 GW. (And then in October, project backer Intercontinental Energy announced that the project was being expanded. Revised capacity: 26 GW. The ICE website also mentions two additional projects in Africa/Middle East and one more in South Asia, information about which will be unveiled “in the months ahead.”)

So on these measures, 235 GW is very big indeed – approaching an order of magnitude larger than the previous benchmarks. And then there is the benchmark cited in the Morning Herald’s headline: according to FMG’s calculation, 235 GW would produce an amount of energy that exceeds that produced in 2019 by oil majors Chevron and Total.

The particulars of FMG’s green energy plans can be stitched together from a variety of sources. On September 15 the Australian Financial Review published FMG Chairman Andrew Forrest’s “first interview about his plans for Fortescue Future Industries (FFI).”  Forrest said that FFI will be the home of FMG’s “green technology businesses.” The interview delves into the specifics of FFI’s engagement with a range of countries. In fact, as Forrest related in his address to FMG’S Annual General Meeting on November 11, “some 40 of us are traveling the world, supported by some 150 experts back in Australia and across the world” to scan “the globe for the best renewable resources.” The team is halfway through an itinerary that encompasses 47 countries, and “has now engaged with 25 governments to develop potential projects.”

The gist of FFI’s approach is discernible in a company press release dated September 1. It describes an investigation, to be undertaken jointly with the government of Papua New Guinea, into “the feasibility of potential projects for development of PNG’s hydropower resources to support green industrial operations largely for export to global markets, and also for domestic consumption.” The Financial Review article mentions the possible development of “hydro power and other geothermal projects” in Afghanistan, and “multibillion-dollar hydro power and renewable energy projects” in Indonesia.

A more detailed press release appeared this week about a potential project in Tasmania:

The project envisages the construction of a 250MW green hydrogen plant at the Bell Bay Industrial Precinct with green ammonia production capacity of 250,000 tonnes per year for domestic and international export. It has the capacity to be one of the world’s largest green hydrogen plants, powered entirely by Tasmanian renewable energy. The project is targeted for an investment decision by the Fortescue Board in 2021.

Forescue Metals Group, “Fortescue announces development study into green ammonia plant in Tasmania,” November 17, 2020

Renewable energy sources are not discussed in the press release, but the Tasmanian Renewable Hydrogen Action Plan refers to the state’s abundant hydro resources.

In his AGM address, Forrest said the company would commit AUD $1 billion (USD $730 million) to decarbonizing its own operations and developing new intellectual property related to its renewable energy thrust.

FMG first came to the notice of the ammonia energy community in 2018 when it formed a partnership with the Commonwealth Scientific and Industrial Research Organisation aimed at commercializing CSIRO’s ammonia cracking technology.