Fortescue Moves to Eliminate Fossil Fuel Risk

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Fortescue Metals Group has announced that it will invest US$6.2 billion by 2030 to eliminate fossil fuel use in its iron ore operations. This will enable FMG to supply its customers with a carbon free product. The elimination of diesel, natural gas, and carbon offset purchases from its supply chain is expected to reduce operating costs by US$818 million per year.

Fortescue is aiming for real zero: “Real zero refers to no fossil fuels and wherever possible no offsets. Offsets must only be used as a temporary solution while the technology or innovation required to completely decarbonize is developed.” This is a critical step forward that many climate activists have been pushing for.

“Fortescue made the announcement at the invitation of US President Biden’s First Movers Coalition and the United Nations Global Compact, with the Secretary General of the United Nations at the CEO roundtable on ‘Business leadership to rescue the Sustainable Development Goals’. The strategy will see the Company lead the market in terms of its response to growing customer, community and investor expectations to reduce/eliminate carbon emissions.

“Fortescue also announced that the Science Based Targets Initiative (SBTi), will verify and audit its emissions reduction. This technical auditing initiative was instituted to ensure companies reach their Paris Agreement goal to limit global warming to 1.5 degrees.”

Twiggy Forest, Executive Chairman of Fortescue Metals Group, has previously made headlines with his gravity train, hydrogen-powered mining trucks, and the conversion of his shipping fleet to run on green energy. Fortescue’s decarbonization strategy and associated investment will enable the company to avoid 3 million tons of CO2 equivalent emissions per annum.

Fortescue Metals Group intends to invest the US$6.2 billion in the years 2024–28. The money will be used to deploy 2–3 GW of  additional renewable energy generation and battery storage; and to upgrade the mining fleet and locomotives. It is expected that this will displace approximately 700 million liters of diesel and 15 million GJ of gas per annum by 2030.

“We are already seeing direct benefits of the transition away from fossil fuels — we avoided 78m liters of diesel usage at our Chichester Hub in FY22 — but we must accelerate our transition to the post fossil fuel era, driving global scale industrial change as climate change continues to worsen. It will also protect our cost base, enhance our margins and set an example that a post fossil fuel era is good commercial, common sense,” Fortescue Executive Chairman Dr Andrew Forrest AO said.

Avoiding Fossil Fuel Risk
Image courtesy of Fortescue Future Industries.

“Fortescue, FFI and FMG, is moving at speed to transition into a global green metals, minerals, energy and technology Company, capable of delivering not just green iron ore but also the minerals, knowledge and technology critical to the energy transition.”

It is heartening to see Australian mining companies making great strides towards the post–fossil fuels era. Fortescue’s announcement follows hot on the heels of recent announcements by BHP.

All charts courtesy of Fortescue Metals Group

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David Waterworth

David Waterworth is a retired teacher who divides his time between looking after his grandchildren and trying to make sure they have a planet to live on. He is long on Tesla [NASDAQ:TSLA].

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