Traditional Owners working with Fortescue to eliminate fossil fuels by 2030

Fortescue Metals Group Ltd has today updated its heavy industry decarbonisation strategy, aiming to eliminate fossil fuel use and achieve real zero terrestrial emissions across its iron ore operations by 2030.

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 investment will eliminate Fortescue’s fossil fuel risk profile and enable it to supply its customers with a carbon free product, a response to growing customer, community and investor expectations to reduce/eliminate carbon emissions.

Fortescue expects to generate attractive economic returns from its investment arising from the operating cost savings due to the elimination of diesel, natural gas, and carbon offset purchases from its supply chain. Fortescue is well positioned to capitalise on first-mover advantage and the ability to commercialise decarbonisation technologies.

Fortescue also announces 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.

When fully implemented, Fortescue’s decarbonisation strategy and associated investment will provide significant environmental and economic returns by 2030, including:

• Avoidance of 3 million tonnes of CO₂ equivalent emissions per annum
• Net operating cost savings of US$818 million per annum from 2030, at prevailing market prices of diesel, gas and Australian Carbon Credit Units (ACCUs)[1]
• Cumulative operating cost savings of US$3 billion by 2030 and payback of capital by 2034, at prevailing market prices
• Elimination of Fortescue’s exposure to fossil fuels and associated fossil fuel price volatility which in turn, will de-risk the operating cost profile
• Removal of the Company’s exposure to price risks associated with relying on carbon offsets as well as carbon tax regulatory risk
• Establish a significant new green growth opportunity by producing a carbon free iron ore product and through the commercialisation of decarbonisation technologies
• Ensuring future access to green driven capital markets.

The capital estimate is US$6.2 billion, with the investment largely planned in FY24-28. This investment includes the deployment of an additional 2-3 GW of renewable energy generation and battery storage and the estimated incremental costs associated with a green mining fleet and locomotives. The capital expenditure to purchase the fleet will be aligned with the scheduled asset replacement life cycle and included in Fortescue’s sustaining capital expenditure. Studies are underway to optimise the localised wind and solar resources.

Fortescue Executive Chairman, Dr Andrew Forrest AO said, “There’s no doubt that the energy landscape has changed dramatically over the past two years and this change has accelerated since Russia invaded Ukraine.

“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."

Meanwhile, Esperance Tjaltjraak Native Title Aboriginal Corporation (ETNTAC) and Fortescue Future Industries (FFI) have held their first engagement meeting following the signing of an agreement earlier this year that paved the way for FFI to further assess the potential for a green hydrogen hub in Western Australia’s South East.

ETNTAC represents the Kepa Kurl Wudjari People, the native title holders of the Esperance region where FFI proposes to undertake feasibility studies for its South East Western Australia Green Hydrogen Hub.

The studies will help to refine the project’s footprint and land tenure requirements should FFI decide to progress with it.

FFI Director – Australia West Maia Schweizer said the discussion marked the start of what she hoped would be lasting and mutually beneficial collaboration between FFI and ETNTAC.

“The missions of FFI and the Esperance Tjaltjraak Native Title Aboriginal Corporation are closely aligned,” Ms Schweizer said.

“The project will only progress with the support of the Kepa Kurl Wudjari People."

“FFI’s mission is to help stop global warming by providing a renewable alternative to fossil fuels. We are excited and humbled to work with ENTNAC to care for Country in the broadest sense, and to create opportunities for the Kepa Kurl Wudjari People."

“They also offer important traditional knowledge and management practices in caring for the land and sea.

To read more about Fortescue's diversification into a green renewables and resources company, go to the FFI website here.