Fortescue strengthens target for carbon neutrality by 2030
Fortescue Metals’ subsidiary Fortescue Future Industries (FFI) will be a key enabler of the miner’s carbon neutrality target through the development of green electricity, green hydrogen and green ammonia projects in Australia.
Fortescue Chief Executive Officer, Elizabeth Gaines, commented: “Fortescue has a proud history of setting ambitious stretch targets and we are pleased to announce this new industry-leading target, with detailed planning underway and projects identified to support our operational emissions reduction goals, building on the industry leading initiatives that have previously been announced. We are working towards decarbonising our entire mobile fleet and fixed plant through the next phase of hydrogen and battery electric energy solutions.”
Fortescue is seeking to move from being a major consumer of fossil fuel with a current trajectory of more than 1 billion litres a year of diesel being used across the operations if no remedial action is taken – to a major clean and renewable energy exporter.
Fortescue’s Chairman Dr Andrew Forrest added: “We have joined the global battle to defeat climate change. We are trialling and demonstrating green hydrogen technologies in global-scale commercial environments, while also rapidly evolving into a green hydrogen and electricity producer of similar scale.”
FFI is advancing projects across Australia including Tasmania, to build large-scale renewable energy and green hydrogen production capacity. This will expedite the substitution of green hydrogen and green ammonia for carbon-based fuels. These projects will, with the support of Australia’s governments, contribute to a significant reduction in national carbon emissions.
Through FFI and its highly committed Operations team, Fortescue is undertaking to deliver several key projects by the stretch target of 30 June 2021. This will underpin its pathway to decarbonisation. These projects include:
- Developing a ship design powered by green ammonia and trialling that design in new ammonia engine technology, at scale
- Testing large battery technology in our haul trucks
- Trialling hydrogen fuel cell power for our drill rigs
- Trialling technology on our locomotives to run on green ammonia
- Conducting trials to use renewable energy in the Pilbara to convert iron ore to green iron at low temperatures, without coal.
Gaines concluded: “Each of these projects will contribute to the world’s inexorable march to carbon neutrality. Fortescue will establish that the major steel, truck, train, ship and mobile plant industries can be operated with renewable, environmentally friendly energy. This will be possible as a result of these ground-breaking Fortescue trials.
“Each will be tested by Fortescue using commercial-scale equipment to prove that the demand for direct green electricity, green hydrogen and green ammonia could one day be as large as the fossil fuel industry.”
BHP deliberates ditching fossil fuels for greener mining
The world’s biggest miner, Australian-based BHP, is supposedly considering withdrawing from a multi-billion dollar contract, which would see the company generate more than US$2bn due to mounting pressure over aligning its business with ongoing climate concerns and ESG-compliance measures.
Exiting the agreement would mean BHP escalate its distancing from oil and gas and subsequently cut down on the amount of fossil fuels used by the company when mining.
It’s estimated that the petroleum business being debated upon could actually be worth around US$15bn but is still under talks to be put up for sale.
Global Mining Giant Considers Greener Future
BHP has made itself clear that it wants to avoid becoming unable to sell its assets. As competition within the market increases following higher numbers of oil giants wrestling with investors to deal with climate pressure, so too are the number of mining rivals looking to make environmental changes for the future.
However, BHP currently has the upper hand as a stalwart mining company that established itself back in the 1960s, allowing it the time to grow and dominate over other fast-appearing mining competition.
Mike Henry, BHP Chief Executive, has an optimistic outlook for the future of oil and gas despite worries over rising demand to align his business with the Paris Climate Agreement. Henry argues that prices remain promising due to a lack of industry-wide investment.
BHP’s petroleum business won’t be easy to say goodbye to. Forecasted to generate around 6% of profits during the ongoing financial year (US$2bn), and around US$1.6bn revenue produced by BHP petroleum in the six months leading to December 2020, BHP is due to take a hit no matter what agreement they choose.
On the other hand, distancing itself from thermal coal and petroleum would arguably aid the company’s case to possible - and valuable - investors who may be required to fund BHP’s increased output to places such as Australia and Mexico in the near future.
BHP considers cutting billion-dollar contract to aid climate
An exit away from petroleum has the potential to be “a powerful corporate catalyst,” says Dominic Kane, Analyst at JP Morgan.
“We believe an exit would likely ring-fence BHP’s exceptional cash flows for non-fossil fuel organic growth, mergers and acquisitions and generous shareholder distributions since BHP could avoid a major new capital investment phase this decade in petroleum.”
BHP is also set to sanction a giant US$5.7bn Canadian potash mine in August of this year, already seeing potash as a long-term substitute for gas and oil going into the future. The company has also previously announced plans to abandon its 80% share in its joint endeavour with Mitsui, owner of two lower-quality mines in Queensland, Australia.
BHP is scheduled to report its annual results on August 17, after which it may become clearer on whether the company will choose to focus its shift to a low-carbon economy or whether it will stay with its current contract into the coming year.