Andrew Forrest’s Fortescue Metals group will invest $9.2 billion in renewables and save $1.2 billion a year from 2030
Fortescue has come under scrutiny over how much it plans to spend on renewables. On an investor call in July, Pendal Group’s Brenton Saunders told Fortescue chief executive Elizabeth Gaines that the company owed investors more details about the investments of its subsidiary Fortescue Future Industries (FFI).
FFI has been Fortescue’s leader in finding and executing renewable energy investments.
But abrn’s chief investment officer, Camille Simeon, said Tuesday’s roadmap added some credibility to Fortescue’s ambitious climate goals, which had moved the company’s risk profile away from emissions regulations.
“[Fortescue] has aggressive climate goals and it’s an aggressive path, but that’s the strategy they’ve chosen because there are potential revenue opportunities on the other side,” Ms Simeon said.
The risk for the iron ore giant now was whether it could develop the best technologies to capitalize on the green transition, according to Ms Simeon, with investors like her to closely monitor Fortescue’s execution of the strategy.
“Strong and conservative figures”
Dr Forrest said The Australian Financial Review annual expenditures under the entire US$6.2 billion package would not exceed more than 10% of profits generated from Fortescue’s iron ore business in any given year.
“These are very strong and conservative numbers and as you can see it gives an attractive bottom line, while permanently making Fortescue a potential consumer of green power generation,” he said.
The billions of dollars will be spent building 2 GW to 3 GW of renewable power generation and battery storage, as well as “greening” its mining fleet and locomotives.
These investments include a majority stake in a Dutch photovoltaic cell manufacturer, an $83 million commitment to establish a Gladstone hydrogen electrolyzer manufacturing plant and the development of the world’s first battery-electric iron ore train. in the world, where feasibility studies are progressing. Delivery of the first train is scheduled for 2026.
Fortescue is adamant the massive investment will generate a positive net present value (NPV) as it will displace around 700 million liters of diesel and 15 million gigajoules of gas per year by 2030, and reduce CO2 emissions.
“Consistent with Fortescue’s disciplined approach to capital allocation, this investment in renewables and decarbonization is expected to generate attractive economic returns for our shareholders through energy savings and a sharp reduction in fuel purchases. carbon offset,” Dr Forrest said.
Australia back at the climate table
Dr. Forrest, whose visit to New York coincides with Climate Week NYC, will also travel to Pittsburgh for the Global Action Forum on Clean Energy which will be attended by Energy Minister Chris Bowen.
Dr Forrest said he spent several days at the White House, where he said the Biden administration was shedding new light on Australia’s leadership in renewable energy.
“American leaders know Australia is back at the climate table,” he said.
He also met again with US Senator Joe Manchin, whom Dr. Forrest considers an enthusiastic supporter of the energy transition.
“Joe Manchin is a big supporter of the fossil fuel industry. As a Democrat, he also saw that America really needed to get huge renewable energy potential off the ground,” Dr. Forrest said.
Mr. Biden’s Cut Inflation Act, passed by Congress last month, incorporates billions of dollars in subsidies to the renewable energy sector.
Dr Forrest said his team helped drum up support and shape the Cut Inflation Act alongside thousands of other private sector energy investors.
“We piloted the green energy side of the inflation reduction act, we were on standby 24 hours a day to answer questions and give advice, and that helped move the act forward,” said he declared.
“I think President Biden is thrilled with the outcome because he sees billions and billions of dollars of investments and hundreds of billions of dollars of plans being developed.”
Dr. Forrest considered investing in no less than 22 power plants in the coal-mining state of West Virginia and converting them to renewable energy such as hydrogen.
“I think Republicans can see huge investments in Republican hearts all over America.”
Fortescue became a founding member of the First Movers Coalition, along with 33 other global companies, the World Economic Forum and the US President’s Special Climate Envoy John Kerry at the invitation of President Joe Biden.
“As a founding member of the First Movers Coalition, today’s announcement is a big step forward for the decarbonization of heavy industry,” Dr Forrest said.