Fortescue targets green hydrogen production in Brazil
Fortescue Future Industries Pty Ltd (FFI), a wholly owned subsidiary of Fortescue Metals, and Porto do Açu Operações S.A. (Port of Açu), a subsidiary of Prumo Logistica have signed a Memorandum of Understanding (MOU) to assess the opportunity to develop hydrogen-based green industrial projects in Rio de Janeiro, Brazil.
The MOU will allow for FFI and Port of Açu to conduct development studies into the feasibility of installing a green hydrogen plant at Port of Açu, Latin America’s largest privately owned deep-water port-industrial complex.
Subject to the outcome of the studies, the project envisages construction of a 300 megawatt capacity green hydrogen plant at Port of Açu, with potential to produce 250,000 metric tons of green ammonia per year.
The availability of green hydrogen and renewable power is expected to drive further sustainable industrialisation of the port, including production of green steel, fertilizers, chemicals, fuels, and other sustainably manufactured industrial products.
The MOU also lays the groundwork for onsite solar power development projects, as well as offshore wind development projects in the states of Rio de Janeiro and Espirito Santo.
FFI Chief Executive Officer Julie Shuttleworth commented: “FFI is assessing renewable energy and green hydrogen opportunities globally and will lead and drive the green energy and product industry as we transition away from fossil fuels.
“I am excited to announce this MOU with Port of Açu. The opportunity to establish totally new and future large-scale industries will drive growth in the Brazilian economy.
“We expect the potential for new green industries at Port of Açu to substantially diversify, broaden and deepen Brazil’s already skilled workforce.”
Jose Firmo, Chief Executive Officer of the Port of Açu, added: “The Port of Açu is sailing steadfastly ahead toward the sustainable economy of the future. One of the pillars of our vision for the port’s industrialization are today’s operational energy transition projects and the renewable energy-fuelled green industries of tomorrow.
“Açu is a gateway between the growing Brazilian economy and rapidly expanding low carbon businesses around the globe.”
Firmo continued: “It is exhilarating to collaborate with an international partner of this calibre on such a visionary project. This will be the first green hydrogen plant in the country and will place FFI and Açu at the forefront of clean energy production and the green industrialization of Brazil.”
Subject to the completion of feasibility studies and approvals, individual projects will be developed by FFI with ownership and project finance sources to be separately secured without recourse to Fortescue.
Prumo is a private Brazilian company controlled by EIG, a leading institutional investor to the global energy sector.
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.