Fortescue clears the air on green hydrogen
Fortescue Metals Group has tempered its green hydrogen ambitions in investor briefings aimed at settling market nerves about its risk appetite in green energy and recent leadership upheavals.
Fortescue has said it remains committed to making final investment decisions on five green energy projects by December 31.
Fortescue director Mark Barnaba has been part of investor briefings this week. Philip Gostelow
It has told analysts and investors four of the five projects will at least start life as green ammonia, which is easier to transport than hydrogen.
The company maintains that green hydrogen remains its ultimate prize.
The five projects include producing 385,000 tonnes a year of ammonia export at Gibson Island in Queensland, a project in Phoenix, Arizona, where the aim is to produce 12,000 tonnes a year of hydrogen for sale in the mobility sector, a 300,000 tonne-a-year ammonia plant in Brazil aimed at the European market, a Norway plant supplying green ammonia to Europe, and producing green ammonia in Kenya using geothermal energy.
Fortescue has said all five projects will come with fixed price take-or-pay contracts. The company expects to hold equity stakes of somewhere between 25-50 per cent and is looking to sell down the remainder to the likes of sovereign wealth funds.
In his summation of the Fortescue briefing, Barrenjoey’s Glyn Lawcock said the target was for 50-60 per cent debt funding and a rate of return in the mid-teens.
UBS maintained its sell rating on the stock with a 12-month price target of $15.20 a share after sitting in on the briefing, saying this was based on iron ore price caution and uncertainty on energy project economics and execution risks.
The Fortescue share price was down slightly at $20.22
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