Is Twiggy Forrest planning to be the pre-eminent green steel from Fortescue Minerals in 5 years? Could Future Fuels Innovation from FMG:ASX be lining up the biggest transformation in the iron industry ever.
But is the ultimate goal to be vertically integrated? What we see is that the company is executing a plan that involves the whole cycle of green hydrogen from the generation of renewable energy or offtakes, manufacture of the hydrogen electrolysers, developing joint production facilities, and locking in contracts for supply of green H2 to industry. And there is a whole raft of other potential actions. Will they develop their own green steel mill?
Cost Down of Technology
The technology cost curve is well known. E.g. Batteries have decreased by 97% over 2 decades and expected another 94% fall in the next 8 years. Solar has decreased by 98% and now wind and solar are the cheapest forms of energy.
FFI is planning with their Gigafactory electrolyzer to decrease costs by 10 times over 5 years. So a decade ago, the costs would be prohibitive. Now, they look like prices will still need to decrease by 2 to 6 times. But that is across the whole business from start to finish. Creating free renewable energy, converting energy to hydrogen, improving batteries and engineering of motors. and using them.
Is Green Steel from Fortescue Minerals the Ultimate Goal
FMG recognises that they generate just over two million tonnes of greenhouses gases every year, equal to more than the entire emissions of the nation of Bhutan. So they have committed to reducing these asap, and making a whole of business change.
The answer isn’t to stop mining iron ore, which is critical to steel production for the development of humanity, but to produce steel with zero-emissions energy. Australia is in an absolutely unique position to scale green steel
There are two ways. In one, you replace the coal in the furnace with green hydrogen. You get steel but instead of emitting vast clouds of carbon dioxide, you produce nothing more than water vapour.
To strengthen the steel, you simply add the carbon separately. It bonds into the metal rather than dispersing into the atmosphere.
The other way, the radical approach, is to scrap the blast furnace altogether and just zap the ore with renewable electricity.Andrew Forrest, Jan 2021 (Australian Mining)
Fortescue is trialling both methods as the company aims to start building the green steel pilot plant this year and a commercial plant that is powered entirely by wind and solar in the Pilbara region of Western Australia in the next few years. These are just some of the actions that FMG is undertaking and they seem to focus on the total vertical industry from green energy to use.
- Building their own solar plants (expected to be >40GW or half of Australias current capacity)
- Investing in their own 1GW PV solar production facilities (thin film) with a purchase of a 60% stake in HyET from The Netherlands
- Developed their own electrolyzer unit (FMG Media Release)
- Building an 2GW electolyser giga factory in Gladstone QLD with first in 2023. Doubles worlds production of electrolysers
- Licensing technology from Plug Power Canada for low cost electrolyzers
- Announcing a proposed export hub with Sinosteel in WA (Jan 2022 Reuters) including rail and port development project at Oakajee as well as a green hydrogen hub.
- Signing up hydrogen producers around world – over Cop26 they announced about 8 JVs. Includes Jordan, 250,000 Tonnes from Brazil, and 2.3m Tonnes from PNG
- An $8.4b project supplying 2.5m T/yr in Argentina has FFI to install hundreds of wind mills, build an electrolysis plant and a port for exporting the green hydrogen
- Signing up hydrogen users (eg Covestro, the biggest grey H2 user in Europe by 2024 (Media Release)
- Buying electric diesel coal locomotive companies made in Brazil in 2023 (Media Release) as well as progressing ammonia in locos.
- planning huge renewable energy hub in NT (Sun Cable ) and WA
- Investing in solar panel construction 5B.co that allow rapid deployment
- Investing in ships using hydrogen or ammonia. Planning first green ship in 2023 running on ammonia of size 75m. (Media Release)
- Purchased Williams Engineering from UK, which has battery technology in mining trucks
- Deals with hydrogen for steel mills but plannng to have a pilot green steel plant (Media Jan 2021)
- Agreement with JCB and Ryze Hydrogen to become United Kingdom’s largest supplier of green, renewable hydrogen (Media Release)
- Offtakes with JCB that already has hydrogen motors and buses and construction equipement in UK (JCB Hydrogen)
- In Feb 2020, FFI announced a huge 5.4GW wind, solar and battery storage hub in Pilbara. The Western Australian EPA said the renewable energy hub – to be known as the Uaroo Renewable Energy Hub – would be built on the Uaroo and Emu Creek Pastoral Stations, roughly 120km south of Onslow. (More details here)
What Is Financial Structure?
Twiggy Forrest has 3 different structures. These actions are all within the commercial FMG so this is telling that adding value to iron ore is the objective.
- Minderoo Foundation – The Forrests are philanthropists – with a Foundation that is University of WA and other ventures
- Tattarang is his private investment company and has other operations such as mineral exploration, salmon fish farming, beef farming (6 farms of over 120,000ha) and other activities.
- FMG – the iron ore miner and listed on ASX. FFI (Fortescue Future Industries) are a division within FMG and FMG has stated that 10% of net profit after tax annually would flow to FFI. FFI has been inking deals around the world to look into massive “green” hydrogen and renewable energy projects, with potential costs worth more than $US100bn ($134.6bn) over a 10 year period.
Green Steel Technology
SSAB has a plan to have full commercial deliveries of green steel by 2026. The quality and properties of fossil-free steel will be the same as SSABs steel of today. The properties of SSAB’s steel are created in the steelmaking, rolling and heat treatment processes, which will remain the same. The only difference in the process is that the energy used will renewable and not fossil fuel-based. The 2 areas are the creation of the iron ore pellets, and the second is ironmaking.
Other Green Steel Technologies
Recently, Boston Metal, a startup in the USA have focused on Molten Oxide Electrolysis which uses electricity to turn iron ore into liquefied metal. Boston Metal claims it is the most efficient way of producing steel without carbon emissions, and the company plans to be producing a commercial quantity of green steel using this process from 2025. They are already producing liquid ion. Can they scale fast enough. They have the investors, including BHP/ Vale / BMW.
In their MOE cell, an inert metallic anode is immersed in an electrolyte containing iron ore. The result is a clean, high purity liquid metal that can be sent directly to ladle metallurgy — no reheating required.
Conclusion: Green Steel to the World
So it is pretty clear that what he announced in 2021, is they are looking to build a steel mill in Pilbara, using carbon zero mining, zero carbon rail, green hydrogen and export green steel using all green H2 to Europe and USA. Building out the green energy components de-risks the venture.
Just not exporting low cost iron ore to China.