Andrew Forrest’s iron ore and green energy giant Fortescue Metals says it is still holding to its ambitious target of producing 15 million tonnes a year of green hydrogen by 2030.
Forrest unveiled the target in 2021 and two years later his company has likely produced only a few tonnes in prototype devices and projects, as it works on a series of project deals around the world.
It says it has three big green hydrogen projects ready to approve in Australia, depending on how it fares with the Australian government’s $2 billion support scheme, and another five green hydrogen projects scattered around the US, Brazil, Europe and Africa that it hopes to give financial approval to by the end of 2023.
“These are complex projects,” Mark Hutchinson, the head of Fortescue Energy, which now includes Fortescue Future Industries, told analysts on Thursday. “We are competing for capital … but we are on track to do five by the end of the year.”
The company’s most advanced project now appears to be in Arizona, where Fortescue has recently spent $US24 million to buy the company behind a proposed green hydrogen project that aims to produce 12,000 tonnes a year of green hydrogen through an 80MW electrolyser.
Fortescue was asked at its earnings call on Thursday by one analyst that – given the scale of investment needed to reach the 15 million tonnes a year target (another 12,500 projects of the size of Arizona by 2030) – if the ambitious goal was still achievable.
“That’s a pretty punchy CAGR (compound annual growth rate) that you’re looking to expand that business by,” the analyst noted.
Hutchinson said the Arizona project was just a small but important part of its plans.
“It is just phase one,” he said. “All these projects have different phases. So we were going to learn a lot in in the first few projects.
“So the way I think about it is five projects really are the priming the pump, and then we will have bigger projects or different phases for these particular projects. But also, there’s going to be some larger projects coming behind them, which are going to take a bit more time.
“I’ve been traveling over the last few months in the Middle East in Africa, in the United States, and we have some larger projects that come into the pipeline, and 15 million tonnes is still there (as a target).
“I believe that by 2030 will we’ll get to that point. The mix of partnerships, developing projects ourselves …. we’re not looking to finance the all the projects 100% with equity, there is a wall of money out there waiting for projects.”
Fortescue’s most prospective green hydrogen project in Australia is at Gibson Island in Queensland, where the company plans to install a 500MW hydrogen electrolysis facility to produce green hydrogen.
The project also envisages a retrofit of chemical giant Incitec Pivot’s existing ammonia manufacturing facility to produce up to 400,000 tonnes of green ammonia a year, using the green hydrogen produced at Gibson Island.
“The feed process is on track, discussions on he renewable power supply are advanced and electrical connection and water supply agreements are progressing,” Hutchinson said.
“We are working closely towards the goal of our final investment decision by the end of this calendar year. And we remain absolutely focused on operating costs and capital discipline.”
Hutchinson said the recently announced $2 billion Hydrogen Headstart program has been fast-tracked to October this year and will be essential to send a very strong signal about the viability of green hydrogen and its role in the energy transition in Australia, particularly with the huge incentives in the US.
“The sooner this program is underway, the sooner the industry here can start to deliver green hydrogen projects, and the better Australia’s competitive position globally will be,” Hutchinson said.
“We also look forward to working with the Australian government on a national hydrogen strategy refresh. And we see this as another opportunity to help address the policy gaps that still exists between Australian domestic hydrogen production and international markets, principally the US.”
