Fortescue Metals Group Ltd (Fortescue, ASX: FMG) has updated its world leading heavy industry decarbonisation strategy, aiming to eliminate fossil fuel use and achieve real zero terrestrial emissions (Scope 1 and 2) across its iron ore operations by 2030. The investment will eliminate Fortescue's fossil fuel risk profile and enable it to supply its customers with a carbon free product.

The strategy will see the Company lead the market in terms of its response to growing customer, community and investor expectations to reduce/eliminate carbon emissions. Fortescue expects to generate attractive economic returns from its investment arising from the operating cost savings due to the elimination of diesel, natural gas, and carbon offset purchases from its supply chain. Fortescue is well positioned to capitalise on first-mover advantage and the ability to commercialise decarbonisation technologies.

Fortescue made the announcement at the invitation of US President Biden's First Movers Coalition and the United Nations Global Compact, with the Secretary General of the United Nations at the CEO roundtable on 'Business leadership to rescue the Sustainable Development Goals'. As a founding member of the First Movers Coalition, today's announcement is a strong step forward for the decarbonisation of heavy industry.

Fortescue also announces that the Science Based Targets Initiative (SBTi), will verify and audit its emissions reduction. This technical auditing initiative was instituted to ensure companies reach their Paris Agreement goal to limit global warming to 1.5 degrees.

Fortescue's decarbonisation journey started on the commencement of the first major trip on 25 August 2020 during the advent of COVID-19 to secure technology, demand and resources for the green energy ecosystem. It consolidated further at the successful completion of the 100-day sprint to create the world's first mining truck to run on hydrogen. Two and a half years later the United States has introduced the historical Inflation Reduction Act, that is driving investment and production into the green energy ecosystem on global scale. The passing of such initiatives will be followed by other Governments endorsing Fortescue's earlier strategy.

When fully implemented, Fortescue's decarbonisation strategy and associated investment will provide significant environmental and economic returns by 2030, including:

Avoidance of 3 million tonnes of CO2 equivalent emissions per annum

Net operating cost savings of US$818 million per annum from 2030, at prevailing market prices of diesel, gas and Australian Carbon Credit Units (ACCUs)[1]

Cumulative operating cost savings of US$3 billion by 2030 and payback of capital by 2034, at prevailing market prices

Elimination of Fortescue's exposure to fossil fuels and associated fossil fuel price volatility which in turn, will de-risk the operating cost profile

Removal of the Company's exposure to price risks associated with relying on carbon offsets as well as carbon tax regulatory risk

Establish a significant new green growth opportunity by producing a carbon free iron ore product and through the commercialisation of decarbonisation technologies

Ensuring future access to green driven capital markets.

The capital estimate is US$6.2 billion, with the investment largely planned in FY24-28. This investment includes the deployment of an additional 2-3 GW of renewable energy generation and battery storage and the estimated incremental costs associated with a green mining fleet and locomotives. The capital expenditure to purchase the fleet will be aligned with the scheduled asset replacement life cycle and included in Fortescue's sustaining capital expenditure. Studies are underway to optimise the localised wind and solar resources.

The investment is expected to generate a positive net present value (NPV) through enabling the displacement of approximately 700 million litres of diesel and 15 million GJ of gas per annum by 2030, as well as the associated reduction in CO2 emissions.

Fortescue Executive Chairman, Dr Andrew Forrest AO said, 'There's no doubt that the energy landscape has changed dramatically over the past two years and this change has accelerated since Russia invaded Ukraine.

'We are already seeing direct benefits of the transition away from fossil fuels - we avoided 78m litres of diesel usage at our Chichester Hub in FY22 - but we must accelerate our transition to the post fossil fuel era, driving global scale industrial change as climate change continues to worsen. It will also protect our cost base, enhance our margins and set an example that a post fossil fuel era is good commercial, common sense.

'Fortescue, FFI and FMG, is moving at speed to transition into a global green metals, minerals, energy and technology Company, capable of delivering not just green iron ore but also the minerals, knowledge and technology critical to the energy transition.

'Consistent with Fortescue's disciplined approach to capital allocation, this investment in renewable energy and decarbonisation is expected to generate attractive economic returns for our shareholders through energy cost savings and a sharp reduction in carbon offset purchases, together with a lower risk cost profile and improvement in the integrity of our assets.'

Fortescue has already made significant effort in decarbonising its iron ore operations through its successful green fleet trials and innovation, acquisition of Williams Advanced Engineering (WAE), and its partnership with Liebherr in June this year. Building on Fortescue's announcement in March 2022 to develop with FFI and WAE the world's first regenerating battery electric iron ore train, feasibility studies are progressing, with delivery of the first parabolic (gravity powered) drive trains to the Infinity locomotives scheduled to be operational by the end of 2026.

Contact:

Fortescue Head Office

Fortescue Metals Group Ltd

Level 2 87 Adelaide Terrace

East Perth WA 6004

Australia

Telephone: +61 8 6218 8888

Facsimile: +61 8 6218 8880

(C) 2022 Electronic News Publishing, source ENP Newswire