Fortescue invests in Australian green hydrogen, ammonia
Fortescue Future Industries (FFI), the green energy arm of Australia's third-largest iron ore producer Fortescue Metals, plans to build a hydrogen electrolyser production plant at Gladstone in Queensland and convert an ammonia production facility near Brisbane to green hydrogen.
The two major Queensland projects will reduce the carbon emissions of a state that is heavily reliant on coking and thermal coal exports for royalty income.
FFI plans to build a facility capable of producing 2GW/yr of hydrogen electrolysers at Gladstone, with first production scheduled for 2023. FFI, which is underpinned by a strong Fortescue Metals balance sheet, will make an initial investment of A$114mn ($83.5mn) with construction set to begin in February, pending final approvals. The 2GW/yr capacity facility at Gladstone will more than double current global electrolyser production, according to FFI.
Fortescue plans to use hydrogen and ammonia produced from renewable sources to allow its core iron ore business to achieve net-zero greenhouse gas emissions from customer use of its iron ore by 2040. It has committed to generating 15mn t/yr of green hydrogen by 2030, rising to 50mn t/yr by 2040.
As part of this plan it is working with Australian fertilizer and chemicals firm Incitec Pivot to study converting the 50,000 t/yr Gibson Island ammonia production facility to green hydrogen from natural gas as a feedstock. Incitec is developing the Range gas project in Queensland to supply natural gas to the fertilizer plant at Gibson Island, with the pilot beginning production at Range in June. It also has a contract to buy gas from the 9mn t/yr Australia Pacific LNG plant to meet Gibson Island's needs from 1 April 2020 through to 31 December 2022.
Incitec has struggled with volatile gas prices and threatened to close Gibson Island in May 2019 if it were unable to secure gas at an economical rate beyond December 2019. The Australian domestic gas price has not spiked in line with the ANEA LNG price and European gas prices, but it has returned to levels seen in May 2019 when Incitec threatened to close Gibson Island. The ANEA is the Argus assessment for spot deliveries to northeast Asia.
Argus last assessed the Wallumbilla domestic gas index in Queensland at A$9.27/GJ on 8 October, up from A$6.47/GJ six months ago but close to the A$9.44/GJ seen on 17 May 2019. The domestic price is far below the Gladstone LNG export price, which Argus last assessed at A$46.31/GJ, up from A$8.76/GJ six months ago.
"FFI's goal is to become the world's leading, integrated, fully renewable energy and green products company, powering the Australian economy and creating jobs for Australia as we transition away from fossil fuels. Our manufacturing arm, starting with electrolysers and expanding to all other required green industry products, will herald great potential for green manufacturing and employment in regional Australia," chief executive Julie Shuttleworth said.
Shuttleworth envisages five more stages beyond the 2GW/yr electrolyser factory at Gladstone, which will include production of wind turbines, long-range electrical cable, photovoltaic cells and associated infrastructure on the site near the key Queensland port of Gladstone.
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