Andrew “Twiggy” Forrest’s Fortescue Metals Group has announced three of the first green hydrogen deals to reach a final investment decision in the United States and Australia.
The board has approved the Phoenix hydrogen hub in the US, a green hydrogen project in Gladstone, Queensland, and a green iron trial plant in Western Australia.
But a Gibson Island green hydrogen and ammonia project in Queensland is yet to reach the investment milestone.
It “requires further work as Australia struggles to shed its petro-state status and still suffers structurally high green electricity costs”, the company said on Tuesday.
The estimated total investment in the three approved projects is approximately $US750 million ($1.1 billion) over the next three years.
Fortescue Energy’s FY24 capital expenditure guidance was updated to $US500 million from $US400 million, while Fortescue Metals’ FY24 capital expenditure was unchanged at up to $US3.2 billion.
“With a disciplined approach to capital allocation, we continue to target double-digit project returns,” Fortescue Energy CEO Mark Hutchinson said.
“This is the start of a pipeline of green energy projects we are dedicated to delivering.”
The Phoenix hub comprises an 80 megawatt electrolyser and liquefaction facility with production capacity of up to 11,000 tonnes per year of liquid green hydrogen, with first production planned for 2026.
The company said the hub is expected to qualify for a 10-year tax credit under US law of up to $US3 per kilogram.
The project is also anticipated to indirectly benefit from a low carbon fuel standard credit scheme that has been adopted in California ahead of a ban on the sale of combustion engine trucks by 2036.
The 50 megawatt project in Gladstone uses Fortescue’s own electrolyser technology, with first production slated for 2025.
The green iron plant to be built at Christmas Creek will use existing green hydrogen and green electricity from solar generation, hematite and magnetite ore production capacity and existing infrastructure.
Fortescue Metals CEO Dino Otranto said new technologies will help to step away from the use of fossil fuels.
“We are confident that our approach will drive growth for Fortescue through new, high value products being sold into new markets, ultimately leading to an increase in the number of iron units we sell,” he said.
AAP
