Fortescue’s electrification spend hits $1 billion-a-year “run rate,” as diesel savings start to flow

Fortescue’s decarbonisation spend will peak in the “next couple of years”, with this year the first of really significant outlays, says CEO Dino Otranto. 

The iron ore miner spent $427 million in the first half of fiscal 2026 on decarbonisation, as it started building its second solar project, its first wind venture, and started using its first electric equipment. 

It expects this spending to ramp up to between $800 million and $1.2 billion for the year. 

The company has already banked some savings from swapping out diesel, Otranto said during the company’s half year results presentation. 

Still to be ironed out, however, is how much the bill to Queensland will be.

The Queensland government wants to recover $66 million in subsidies paid to Fortescue to set up a green hydrogen electrolyser manufacturing project in Gladstone.

Fortescue revealed in July 2025 that it had pulled the plug on the $150 million PEM50, where it was planning to build the proton exchange membrane (PEM) electrolyser technology it had developed in-house – before finding it was not competitive.

With the electrolyser projects off the books, Fortescue has pulled back to the Pilbara where it is installing batteries, solar and wind, has put two electric locomotives, 12 and electric excavators and one electric drill into the field, and is expecting to rebuild how a mining company operates to handle these. 

It is also building a bigger pilot of an electrochemical iron-making process at the Christmas Creek mine, a project that seeks to capitalise on the premium for green metals being baked into Europe and China carbon border tariffs. 

The iron ore giant is not changing its $6.2 billion decarbonisation budget guidance, says CFO Apple Paget. 

“We’ve spent about $800 million [in the year] up to 30 June last year. Let’s say we spend another billion dollars [this year]. We’ve given the $6.2 billion in real terms, we’ve probably got a run rate of about billion dollars [a year] to the end of the decade,” she told analysts during the Q&A of the results presentation.

“However, it is going to be lumpy. And as Dino said, probably [in the] next couple of years would continue to grow.”

Paget says lower spending on R&D in the first half reflects the move away from in-house technology development and a focus on “priority technologies”.

She also assured analysts and investors that Fortescue went into this period, which also includes potentially hitting go on two new mines elsewhere in the world, with plenty of cash to spend, and a plan.

The company is already seeing savings from using less diesel, with the benefits expected to be between $2-4 per tonne of iron ore before 2030.

“By removing diesel from our operation, we’re taking structural costs out of the business. The less diesel we consume, the less exposure we have to price volatility, and that means stronger and more predictable margins,” Otranto said in a prepared speech during the presentation.

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