Monsters of Rock: FFI boss says green steel by 2050 ‘absolutely possible’
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The new boss of Andrew Forrest’s green energy business Fortescue Future Industries says it is “absolutely possible” steel could be produced primarily via green hydrogen by 2050, as Fortescue Metals Group (ASX:FMG) continues to face scrutiny over its plan to become the world’s biggest exporter of the green fuel by the end of this decade.
FMG, which announced a US$6.2 billion profit and $1.21/sh dividend in its FY22 financial results today, has been equally cheered by green energy fans and jeered by frustrated analysts unable to quantify the value of its hydrogen ventures in the iron ore miner’s $58 billion market cap.
Its green sky messaging and plan to spend hundreds of millions of dollars a year on its own hydrogen and green tech research and marketing has run decidedly against the grain of the more cynical Pilbara majors like BHP (ASX:BHP) and Rio Tinto (ASX:RIO).
As prefaced by Forrest in the speech that launched his green energy ambitions, Confessions of a Carbon Emitter, it too swims in the steelmaking world, with FMG’s ~190Mtpa Pilbara iron ore network contributing to an industry responsible for 8% of the world’s CO2 emissions.
Much of that comes because conventional blast furnace steelmaking requires metallurgical coal to work.
While majors like BHP and South32 (ASX:S32) (which decided last week it would not renew its environmentally sensitive Dendrobium mine near Wollongong past 2028) say met coal will be used in steelmaking for decades to come, FFI’s new CEO Mark Hutchinson is hopeful that can be phased out far sooner.
“Absolutely possible, I think it needs a lot of work in the industry and it gives us the great challenge to have here, and how we can contribute to that,” he said.
“But 2050 I would hope it’s way before then.”
While Fortescue has its own targets of carbon neutrality by 2030 and net zero at the Scope 3 level by 2040, its emissions aren’t moving very much currently.
Twiggy and Co. produced 2.55Mt in CO2 equivalent Scope 1 and 2 emissions in FY22, with “high quality offsets” reducing net emissions to 2.28Mt.
Gross emissions are down from 2.56Mt in FY21 (net 2.36Mt.)
Its increasing iron ore production means FMG’s Scope 3 emissions have lifted 3.1% from 247Mt of CO2 equivalent in FY21 to 255Mt in FY22.
An adjustment in the company’s FY22 climate report increased FMG’s FY20 baseline from 2.09Mt to 2.43Mt, after moving emissions from its iron ore vessels from Scope 3 to Scope 1.
Forrest told media it remained a fact of life FMG still required fossil fuels to operate as it tries to engineer its shift to zero carbon energy, while outgoing CEO Elizabeth Gaines said FMG wouldn’t be reliant on carbon offsets to hit its 2030 emissions target.
“We’re like you mate, we are forced to consume fossil fuels because the world hasn’t got any choice,” he said.
“We can’t move quicker than we are to give ourselves and the world a choice between polluting fuels and green fuels, and we are moving at Fortescue speed to make that happen.”
Fortescue’s ambitions extend well beyond its own operations, where it has been building a $700 million solar and gas project called Project Energy Connect to help reduce diesel use across its operations with a 5.4GW renewable energy project called the Uaroo Renewable Energy Hub also in front of the WA EPA.
It has MoUs for renewable energy projects a green hydrogen sales across the world including with German electricity network operator E.ON.
Forrest has recently resumed life as executive chair of the company he founded having run a global search for a new CEO dating back to Gaines’ flagged exit late last year.
That search ended with Forrest back holding the reins, though he and Gaines have long said another CEO for the iron ore business reporting to the billionaire would be found in time.
It is apparently something only the media cares about, with Twiggy insisting the miner’s shareholders are happy with the current sitch.
“We are still interviewing a range of candidates, I have to say that it is not the highest priority appointment to our company, we are looking at other appointments with equal if not greater importance and we’ll share that with you when we’re ready,” he said.
“But we think that the metals business is in really good hands, strong as an ox, and we will take our time to choose our Fortescue Metals chief executive, and we don’t feel any pressure from media, we’re accountable to our shareholders and they’re very happy with what we’re doing.”
The materials was in the doghouse today, after fears of more rate rises following the Jackson Hole meeting in the States spooked the market.
Few prospered, with mining services firm MACA (ASX:MLD) among the few gainers in the mid to large cap space.
Today Thiess responded to NRW’s bid and MACA shareholders’ timid reaction to its initial $350m, $1.025/sh bid by sweetening the deal to $1.075/sh.
The revised offer represents a 49.2% premium to MACA’s one month VWAP on July 25, the day before Thiess’ offer was announced, with the suitor immediately picking up 15.9% of MACA’s shares after founders and directors representing 9.43% of the company entering written acceptance deeds.
Your move Jules.