The Fortescue Metals Group Limited (ASX: FMG) share price is up 1.7% today to $21.05.
The stock is up 27% over the past month amid the iron ore price spiking by almost exactly the same degree.
Among the big ASX iron ore shares, Fortescue has been the main beneficiary of the commodity price uplift. This is because it is a pure-play iron ore miner.
But that's not the company's future. And this is why Fortescue's shareholder register has more than doubled over the past three years, according to founder and executive chair Andrew Forrest AO.
Why are ASX investors ploughing funds into Fortescue shares?
At the annual general meeting (AGM) last month, Forrest said investors were buying into Fortescue's green energy future. He said:
In the last three long COVID years, so much has happened!
The reformation of our company has led us from our 80,000 shareholders growing to 180,000 and climbing.
So many people now believe that a mining company can also be the most climate responsible company in the world.
Forrest reckons Fortescue can have a "more profitable future" under its new structure as a global green energy and resources company.
He said Fortescue was "stepping beyond fossil fuels, diversifying, driving a new and stronger, more profitable future and using ourselves as an example to defeat Climate change".
Unpinning that goal was the founding of a subsidiary business, Fortescue Future Industries (FFI) in 2020.
Fortescue Future Industries has two goals — decarbonise Fortescue's metals business and grow a global portfolio of critical mineral mines as well as renewable energy, green hydrogen, and green ammonia projects.
What's the latest on decarbonisation?
In September, Fortescue announced it plans to spend US$6.2 billion (A$9 billion) to get this done by 2030.
It's a big spend, but Forrest argues the benefits will be swift and fast. There will be about US$3 billion in savings along the way which will reduce the net cost to US$3.2 billion by 2030, he says.
At the AGM, Forrest said:
We are the first major heavy industrial company to have a fully costed and funded plan to eliminate fossil fuels and reach real zero. … Real zero means no oil, gas or diesel and no offsets.
When fully implemented, we will save three million tonnes of CO2 poison going into the environment per annum.
One decarbonisation measure is introducing zero-emissions green mining haul trucks from 2025.
Forrest said: "Our truck haulage currently consumes around 200 million litres of diesel per year and accounts for 26 per cent of our Scope 1 and 2 emissions – so as of 2025, whack! We're going to make a huge difference."
What's the latest on FFI green projects?
Fortescue Future Industries CEO Mark Hutchinson gave shareholders an update at the AGM, saying:
In the past year, we have seen great progress on a number of these projects that will come online over the next decade.
In the short term, we will focus on prioritising the projects that will ensure our time, our resources, and our funds deliver the outcomes we, our customers, and our shareholders expect.
Our focus now is razor sharp on project delivery.
He highlighted a number of developments over the year:
- An agreement with the Kenyan Government to develop a green ammonia and fertiliser facility by 2025. It will provide affordable green fertiliser to the domestic market, thereby creating food security
- FFI is working with Incitec Pivot Ltd (ASX: IPL) to convert their existing ammonia production facility on Gibson Island in Queensland into a green ammonia plant using renewable energy
- Construction has begun on Fortescue's Green Energy Manufacturing Centre (GEM) at Gladstone in Queensland. This will be the world's largest electrolyser facility, with the first electrolyser to be manufactured in 2023. GEM will also manufacture wind turbines and solar panels. Hutchinson said this will create "new revenue streams … and [deliver] significant returns for our shareholders"
- In the US, FFI has established a Technology Hub in Colorado. There's a potential 10-year partnership with the US Department of Energy's National Renewable Energy Laboratory in the works
- A global strategic collaboration deal with energy infrastructure developer Tree Energy Solutions. They want to speed up the development of a green hydrogen import facility in Germany.
Hutchinson said the work Fortescue and FFI had already done in sourcing critical minerals around the world means FFI can now focus on "building out the demand side, where we are already in a very strong position".
He concluded:
I've just spent a couple of weeks travelling internationally – we are seeing significant global demand for the green hydrogen and green energy we will produce, and for the technology that we are developing.
This is evident through the discussions we are having on several offtake agreements with companies around the world …
How is the transformation impacting the Fortescue share price?
Over the COVID years, Fortescue has ramped up activities through FFI. In that time, the Fortescue share price has increased in value by 120%.
The stock has gone from a trough price of about $9.60 after the 2020 market crash to where it is today.
