Could the winds of change be blowing for Fortescue shares?

The latest plans of Fortescue Future Industries could lead to huge wind farms in Western Australia.

| More on:
Workers at a wind farm in front of wind turbines

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Fortescue Future Industries is reportedly interested in building hundreds of wind turbines in Western Australia
  • This would be part of FFI’s plan to build a green ammonia (and perhaps green hydrogen) hub near Esperance
  • FFI is also looking for a spot to build a new port for importing construction materials and then exporting its production

Fortescue Metals Group Limited (ASX: FMG) shares could be impacted by the latest plans of Fortescue Future Industries (FFI).

While Fortescue may be best known as a large iron ore miner, it now has plans to turn itself into an integrated resources and green energy business. It's aiming to take a global leadership position in green energy and technology and is committed to producing zero carbon green hydrogen.

While FFI has been working on a global portfolio of energy projects, the Australian Financial Review has reported on the potential latest project that could be closer to home — in Western Australia.

Wind farms for Esperance?

Fortescue Future Industries has reportedly signed exclusivity agreements with some farmers as it tries to gain access to land. It wants to build "hundreds" of wind turbines near Esperance and "turn the region into a green hydrogen hub". Another part of the plan is looking for port sites near Esperance.

According to the AFR, if farmers agree to give FFI access to a portion of their land, they could receive annual fees of "$15,000 or more" per wind turbine. They will also get a "low-cost" supply of green ammonia to fertilise their land.

One of the people looking to make this happen is Maia Schweizer. She's in charge of FFI's work in Western Australia, South Australia, and the Northern Territory.

She said the company needs a new port so it can import construction materials and export green ammonia, and potentially green hydrogen.

The AFR quoted Schweizer, who said:

The short answer is we will almost certainly need a new facility somewhere along the coastline.

We've done a desktop review to identify some potential sites. That's not a simple matter so now the real work begins of engaging with the local community and First Nations and finding a suitable location for that to happen.

How much will this cost?

One of the hurdles that Fortescue Future Industries may need to clear is the cost of this project.

The AFR reported that it could cost "tens of billions of dollars" to build the port, at least one desalination plant, an electrolyser, an ammonia production plant, and a network to connect all the wind turbines across all the farms involved.

Is there local interest in the plans?

Schweizer suggested that the project will need to be large enough to export to other markets. She thinks the reception from the community has been "really, really quite positive".

There was feedback that farmers being able to diversify their revenue and reduce their carbon footprint in a decarbonised world market was "really promising".

The AFR also quoted Karl Raszyk, who farms between Cascade and Scaddan.

Raszyk said:

I think most of the farmers are on the same page looking to reduce their emissions long-term and this project allows them to do that in a big way in the form of green fertiliser, or green ammonia.

One day we'd like to be able to sell green food like Andrew Forrest is trying to sell green steel.

The attraction of green ammonia for Raszyk is that it would provide nitrogen. This would replace fossil fuel-produced fertiliser, which makes up about 70% of the carbon footprint of the grain farms.

Fortescue share price snapshot

Since the beginning of 2022, Fortescue shares have fallen 3.7%.

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »

mining asx shares represented by miner writing report on clipboard
Resources Shares

This ASX 200 miner is ramping up copper output as prices reach all-time highs

Copper production leads quarterly update.

Read more »