Fortescue Delays Green Hydrogen Ambitions, Reaffirms Commitment To Future Projects

Australian iron ore mining giant Fortescue FSUMF has hit the brakes on ambitious plans to transform into a green hydrogen leader. Management has announced an overhaul after a turbulent period that saw multiple senior executive departures.

While iron ore still generates most of the company's revenue, its founder and executive chairman, Andrew Forrest, has been steering towards green technologies. Still, a Fortescue spokesperson told Bloomberg that the company’s goal of producing 15 million tons of green hydrogen annually by 2030 has been put on hold owing to higher energy prices.

In a statement on Wednesday, Fortescue announced the job cuts as part of an effort to simplify the business structure. However, the company did not specify which departments would be affected by these layoffs.

“It’s a business that’s run hard around its decarbonization strategy. And whilst they haven’t pointed to which divisions are affected, that part of the business has continued to burn a lot of capital,” said Jarden Securities analyst Jon Bishop.

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Green hydrogen, produced by splitting water into hydrogen and oxygen molecules using renewable energy, has yet to be commercially viable anywhere in the world. Fortescue currently produces a relatively small amount at a plant in the Pilbara region of Western Australia, and recently committed to three additional projects with an investment of around $750 million.

“Our vision for Fortescue has not changed,” Forrest said. “I truly believe in the power that green hydrogen will unlock for decarbonizing hard-to-abate industry,” he noted, adding that Fortescue would continue to focus on green electricity in the Pilbara region and North Africa and green hydrogen in places like Brazil and Norway.

Per AFR's report, Forrest also noted that the wars in Ukraine and the Middle East have increased global energy prices, making large-scale green hydrogen production unviable. “In that environment, you’re not going to bring in major sources of green hydrogen, which relies on cheap energy prices,” he told the newspaper.

Despite these setbacks, Fortescue remains committed to its green energy projects. The company is advancing plans for an advanced manufacturing facility in Michigan and has established an office in New York to attract further investment into its green energy ventures.

In addition to the restructuring, Fortescue announced key executive appointments. Apple Paget, who has been acting as chief financial officer for the past 11 months, will assume the role permanently. Meanwhile, Shelley Robertson, who joined Fortescue nine months ago as chief corporate officer, has been appointed chief operating officer.

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