By Rhiannon Hoyle
Australian iron-ore giant Fortescue outlined plans to speed up the development of its own renewable-power network in remote northwestern Australia as an energy shock from the conflict in the Middle East ripples globally.
Fortescue has brought forward plans for a standalone, high-voltage network designed to power its mammoth Pilbara iron-ore operations "by a couple of years" as the company races to eliminate fossil fuels--particularly diesel--from its operations, Fortescue's chief of metals and operations, Dino Otranto, said Friday.
The accelerated timetable for Fortescue's renewable-power network is intended to shield the miner from cost pressures and supply disruptions in global markets, Otranto told reporters.
"We've been working over the last few months to see how we can fast-track elements of our decarbonization plan in direct response to a chronic fuel and energy supply issue that we're all facing," said Otranto. The announcement Friday was made "in response to the current crisis that's going on in the Middle East," he said.
Global fuel markets have recently been under pressure from the conflict in the Middle East, which has choked off key sources of supply and driven energy prices sharply higher. That demonstrates "how vulnerable our supply chains are to foreign interests," Otranto said.
In addition to expediting its own renewable-power capacity, the miner is exploring a potential multibillion-dollar expansion of its network to supply power to others, while looking at how else it can make money off its renewable-energy technologies.
Fortescue in 2022 announced a $6.2 billion plan to eliminate carbon emissions from its operations.
The miner had intended to turn on its renewable-power network by 2030, when all of the infrastructure to decarbonize its operations was in place, said Otranto. However, Fortescue has already switched on its first solar and battery installations, and now expects to fully complete the network by the end of 2028, he said.
The budget for the miner's decarbonization plans remains unchanged, said Otranto.
The power network will have roughly 2 gigawatts of generation capacity, from solar and wind farms, and 4-5 gigawatt hours of battery energy storage.
"You'll see the significant majority of that grid being enabled next year," Otranto said.
By early next year, Fortescue expects to have enough renewable capacity to be able to run its ore processing facilities during the daytime. Later in 2027, the system should be able to power all of Fortescue's operations for 24-hour periods without fossil fuels.
Fortescue is the world's fourth-biggest producer of steel ingredient iron ore, which it sells mostly to steel mills in China. It expects to save $100 million in fossil fuel costs by next year, and projects the shift to clean energy will pare the cost per metric ton of producing iron ore at its operations.
Fortescue was last month forced to secure emergency fuel supplies at up to double the usual price, Fortescue founder and executive chairman Andrew Forrest said in a statement. He said the availability of solar power helped contain the volumes it needed to buy at that price.
Otranto said the runup in prices was exacerbated by the impact of a cyclone, which lashed Australia's northern coast during March. He said he didn't have specific details on the amount of emergency fuel that Fortescue had to buy.
Fortescue has in recent years sought to diversify its business--which today relies on iron ore for its income--with investments in clean energy.
Last year, however, the company was forced to shelve key green hydrogen projects in the U.S. and Australia as the Trump administration cut support for clean-energy industries.
Otranto said Fortescue sees an opportunity to expand its own renewable-power network to sell energy to customers, leveraging the existing infrastructure it has already built. The miner expects it could add another 2 gigawatts of power-generation capacity and 4 gigawatt-hours of battery storage for less than $2.5 billion.
It is also looking at how else it can sell its technology and expertise, he said.
"It is a long-term, viable business for us that we're excited about," said Otranto.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
04-10-26 0324ET
