A record profit reported by Fortescue Metals Group will to see the company ramp up its spending on new green energy projects, as the company prepares to take on the substantial emissions footprints of its customers and set a dedicated Scope-3 emissions target.
The company announced that it would commit another $1.03 billion in funding to its green energy subsidiary, Fortescue Future Industries, that the company would draw upon to both decarbonise its own operations, as well as to invest in new green hydrogen production and end-use technologies.
“At Fortescue, we are leading the heavy industry battle against global warming, transitioning from being a major fossil fuel importer to a significant green and renewable energy and product exporter,” Fortescue CEO Elizabeth Gaines said.
“We are leading by example to decrease emissions across our operations, using our large industrial platform of operating mine sites in the Pilbara to trial and demonstrate technologies in completely renewable green hydrogen, green ammonia, and green electricity.”
In a media briefing on Monday, Fortescue chairman Andrew Forrest – who will pocket an estimated $4 billion from dividends paid out for the year, or $11 million a day – also said that the company would look to cut the embedded emissions within its products sold to customers.
Fortescue will unveil a Scope-3 emissions target next month, which will require the company to take on the substantial challenge of cutting emissions embedded in its end products. The company’s steel making activities contribute almost 250 million tonnes to the company’s current Scope-3 footprint.
“As we execute on our strategy to become a global leader in the battle against climate change we will establish goals to tackle emissions across our value chain, with specific targets, and a framework for our approach to Scope 3 emissions, to be announced by 30 September 2021,” Gaines said.
During the media briefing, Forrest issued a challenge to other large emitting companies to take on their Scope-3 emissions, saying that heavy manufacturers were key to achieving meaningful reductions in global emissions.
“By 2030 and beyond, we see a fully integrated renewables and resources company as the greatest need for the global community, with our company setting that pace and being the first heavy manufacturing company to declare by 2030 it will be green,” Forrest said. “We do so in an environment where we have, so far, not been followed. Yes, there’s widget makers and others who don’t produce any carbon anyway – and so them going green is really terribly not interesting.”
Forrest also effectively issued a call to the Morrison government to finally adopt a formal zero emissions target, saying that businesses were more likely to respond to the challenge of decarbonisation with a specific target in place.
“it’s an open secret that Fortescue encourages targets. We see a national target for a carbon neutral Australia as being critical to creating a carbon neutral Australia,” Forrest told the briefing.
“All businesses operate well to targets, some exists on target completely. Without concrete targets or specific ambitions, businesses don’t tend to move forward at anything like the pace speed and efficiency they could.”
“We are saying firmly to governments of all persuasion, a carbon neutral target for our country, is critical.”
In an updated climate change statement issued by the company, Fortescue said that it would target four key parts of its own business as part of its decarbonisation efforts, including switching to powering its sites with renewable energy and moving its vehicle fleet – including heavy vehicles used in mining operations – to electric and hydrogen fuelled models. Fortescue said that it would continue to invest in the development of ammonia fuelled locomotives and hydrogen powered heavy machinery.
Fortescue has previously committed to reinvesting at least 10 per cent of its net after tax profits into its renewable energy subsidiary, Fortescue Future Industries, as the company seeks to position itself as a major global supplier of zero emissions energy.
A strong 2020/21 financial result for the company will allow the resources company significantly boost its investments in renewable energy projects, announcing a record after tax profit of $10.3 billion – a 117 per cent increase on the year prior – which will see $1.03 billion made available to Fortescue Future Industries.
Fortescue said that it already had plans for around $500 million in new expenditure on clean energy projects, including the ongoing growth of its green vehicle fleet, the development of new decarbonisation technologies, and additional studies to identify new opportunities – similar to the feasibility study the company completed into a potential renewable hydrogen hub in Tasmania.
“The establishment of Fortescue Future Industries during the year underpinned our industry leading target to achieve carbon neutrality by 2030,” Gaines said.
“FFI will be a key enabler of this target through a forward-looking approach to ensuring our capital investments in decarbonisation are aligned with strategic decisions such as fleet renewal.”
The company has set itself a target of production more than 15 million tonnes of renewable hydrogen annually by 2030 – which Forrest said would be enough to decarbonise the operations of multiple businesses. But the company stopped short of revealing any new specific investments in boosting its hydrogen production capacity.
“We intend to be carbon neutral through between two and three gigawatts of green electricity, which will use hydrogen to act as battery backup when the sun doesn’t shine, or the wind doesn’t blow and we’ll be producing a very large amount of green hydrogen and green ammonia,” Forrest added.
Shares in Fortescue Metals jumped around 5 per cent higher in trading on Monday.