Monsters of Rock: FMG taps green debt markets to fund low carb projects

FMG issues US$800 million in green debt to fund ESG projects
Funding will help back solar project in the Pilbara, hydrogen mobility rollout and Williams Advanced Engineering takeover
Miners dip as Covid in Shanghai weighs on iron ore

Fortescue Metals Group (ASX:FMG) and its founder Andrew ‘Twiggy’ Forrest have talked a big game about decarbonisation in the 12 months since the iron ore magnate’s ‘confessions of a carbon emitter’ speech sent FMG on its green energy journey.

Whether it comes to fruition or is merely Quixotic remains to be seen.

But it has helped FMG rebrand and tap new funding markets specific for green projects, even if some ratings agencies are less than enthused about its actual sustainability credentials.

It has raised US$800 million from the issue of green senior notes that will be applied specifically to green projects, including the 150MW solar component of the Pilbara Energy Connect project, the purchase of US$215 million Williams Advanced Engineering, which is helping FMG produce its zero emissions, self-powered “Infinity Train”, and the hydrogen mobility project at Christmas Creek.

Another US$700 million will be raised through the issue of senior notes, which are available to fund FMG’s share of its 22Mtpa Iron Bridge magnetite mine, a US$3.5b project (69% owned by FMG) which will produce a 68% magnetite concentrate suited to low emissions steelmaking.

“Fortescue’s Sustainability Financing Framework recognises the global growth in sustainability and green sources of capital. The successful completion of Fortescue’s inaugural green financing offering demonstrates the Company’s passion and commitment to integrate sustainability into all aspects of our business, as we take a global leadership position in the green energy transition,” FMG CEO Elizabeth Gaines said.

Fortescue Metals Group (ASX:FMG) share price today:

Iron ore slump drives market lower

FMG was one of the few iron ore miners to end the day ahead after Singapore futures slipped 2.58% to US$157.20/t.

That came after a Covid outbreak in Shanghai intensified, causing concerns over downstream steel and iron ore demand as China shows little signs of breaking from its Covid zero policy.

Australian premium hard coking coal also dipped below US$400/t after prices paid for cargos dropped following what price reporter Fastmarkets said was a weak tender result.

Coal miners were mixed with the materials and energy sectors slipping 0.72% and 1.3%, respectively.