Fortescue to increase spending on energy division

Australian mining company Fortescue will increase spending on its energy division to promote several new green hydrogen projects. It is reported by Reuters.

Initially, the company will focus on four projects in Australia, the USA, Norway and Brazil, after which additional ones will be implemented – in Morocco, Oman, Egypt and Jordan.

Fortescue still plans to increase capital expenditures for its energy division to $500 million, up from initial plans to spend $300 million in fiscal 2024/2025, and net operating expenses to about $700 million, up from $500 million in fiscal 2023/2024.

According to the agency, this statement of the miner disappointed analysts who expected that the restructuring of the company would reduce its capital costs. Fortescue has re-merged its metals and green energy businesses after splitting them into separate divisions a year ago.

Fortescue recently announced it was cutting 4.5% of its global workforce. The company also said it is unlikely to reach its green hydrogen production targets by 2030. The reductions are also due to the fact that the price of iron ore is projected to fall back below $100/t.

Analysts came to the conclusion that Fortescue is slowing down the pace of development of hydrogen technologies, but with a new statement the company confirmed its commitment to this sector.

In addition, experts noted an increase in decarbonization costs to $700-900 million for the fiscal year 2024/2025 from $300-500 million in the previous financial year. Miner aims to reach its carbon neutrality targets by 2030.

Fortescue also plans to focus on producing green iron, or iron produced with less carbon emissions.

Recall that in April of this year, Fortescue announced the opening of a plant for the production of electrolyzers in Gladstone (Queensland, Australia). The modern production complex with an area of 15 thousand square meters was built and fully commissioned in just over two years