Resources major Fortescue Metals Group (FMG) said it will invest $9.2 billion ($US6.2 billion) to eliminate fossil fuel use from its iron-ore operations entirely to achieve “real zero” emissions by the end of the decade.
Fortescue said the majority of the capital will be spent in 2024 to 2028 and will include the deployment of an additional 2 GW to 3 GW of renewable energy generation and battery storage and eliminate its reliance on gas and diesel-fired generation and diesel-fuelled mobile plant, including haul trucks and trains.
The company said studies are also underway to optimise the localised wind and solar resources.
Speaking at the United Nations Global Compact in the United States on Tuesday, Fortescue executive chairman Andrew Forrest said the investment is part of the group’s transformation into a renewables-focused operation.
“Fortescue, FFI (Fortescue Future Industries) 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,” he said.
Forrest said Fortescue’s plan would “set an example that a post-fossil fuel era is good commercial, common sense”.
“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,” he said. “We are already seeing direct benefits of the transition away from fossil fuels – we avoided 78 million litres 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.”
When fully implemented, the investment is forecast to displace 700 million litres of diesel and 15 million gigajoules of gas per annum by 2030, and avoid three million tonnes of carbon emissions per year.
It is also expected to enable Fortescue to eliminate carbon offset purchases from its supply chain as it looks to reduce emissions close to zero, which they call real zero rather than net zero.
Forrest said the investment would also provide significant economic returns, with forecasts tipping it to generate net operating cost savings of $1.2 billion ($US818 million) a year from 2030.
“This investment in renewable energy and decarbonisation is expected to generate attractive economic returns for our shareholders through energy cost savings and a sharp reduction in carbon offset purchases, together with a lower risk-cost profile and improvement in the integrity of our assets,” he said.
The investment builds on Fortescue’s announcement in February 2022 to build a 5.4 GW solar PV, wind and battery energy storage project to power its iron ore mining operations in Western Australia’s north-west.
The Uaroo Renewable Energy Hub would comprise a 3.33 GW solar farm and a 2.04 GW wind farm spread across approximately 10,000 hectares in the state’s Pilbara region. The hub would also include a battery with a storage capacity of 9.1 GWh.
FFI followed that up in March with plans to work with Williams Advanced Engineering (WAE) to develop the world’s first regenerating battery electric iron-ore train.
Fortescue said on Tuesday that the feasibility studies are progressing, with delivery of the first parabolic (gravity powered) drive trains to the Infinity locomotives scheduled to be operational by the end of 2026.