Fortescue will invest $9.3 billion toward implementing its heavy industry decarbonisation strategy in an attempt to deliver on the company’s stated goal of eliminating fossil fuel use and achieving net-zero terrestrial emissions across its iron business by 2030.
The eye watering investment includes the deployment of an additional 2-3GW of renewable energy generation and battery storage and the estimated incremental costs associated with a green mining fleet and locomotives.
Fortescue says the strategy will make it a market-leader in terms of its response to growing customer, community and investor expectations to reduce/eliminate carbon emissions.
The company expects to generate attractive economic returns from its investment arising from operating cost savings due to the elimination of diesel, natural gas, and carbon offset purchases from its supply chain.
Fortescue’s Executive Chairman, Andrew ‘Twiggy’ Forrest AO, said the company’s investment in net-zero targets would return dividends in reduced fossil fuel costs.
“There’s no doubt that the energy landscape has changed dramatically over the past two years and this change has accelerated since Russia invaded Ukraine,” Dr Forrest said.
“We are already seeing direct benefits of the transition away from fossil fuels – we avoided 78m
litres of diesel usage at our Chichester Hub in FY22 – but we must accelerate our transition to the post fossil fuel era, driving global scale industrial change as climate change continues to worsen.
“It will also protect our cost base, enhance our margins and set an example that a post fossil fuel era is good commercial, common sense.
“Fortescue, FFI and FMG, is moving at speed to transition into a global green metals, minerals,
energy and technology Company, capable of delivering not just green iron ore but also the minerals, knowledge and technology critical to the energy transition.”
When fully implemented, Fortescue expects it’s decarbonisation strategy and associated investment to provide significant environmental and economic returns by 2030, including:
- Avoidance of 3 million tonnes of CO2 equivalent emissions per annum
- Net operating cost savings of US$818 million per annum from 2030, at prevailing market prices of diesel, gas and Australian Carbon Credit Units (ACCUs)
- Cumulative operating cost savings of US$3 billion by 2030 and payback of capital by 2034, at prevailing market prices
- Elimination of Fortescue’s exposure to fossil fuels and associated fossil fuel price volatility which in turn, will de-risk the operating cost profile
- Removal of the Company’s exposure to price risks associated with relying on carbon offsets as well as carbon tax regulatory risk
- Establish a significant new green growth opportunity by producing a carbon free iron ore product and through the commercialisation of decarbonisation technologies
- Ensuring future access to green driven capital markets
“Consistent with Fortescue’s disciplined approach to capital allocation, this investment in renewable energy and decarbonisation is expected to generate attractive economic returns for our shareholders through energy cost savings,” Mr Forrest said.
“And a sharp reduction in carbon offset purchases, together with a lower risk cost profile and improvement in the integrity of our assets.”
