Former Fortescue Metals Group (ASX:FMG) – now just Fortescue Ltd – has expanded its push to embrace “zero emission mining solutions.”
In a fresh A$4B deal with German-Swiss engineering multinational Liebherr, the latter will supply no less than three hundred and sixty (360) electrified autonomous battery-powered trucks to FMG; as well as 55 electric excavators and a further 60 battery-powered bulldozers.
This will see roughly two thirds of Fortescue’s operational fleet electrified – which feels a lot like a more direct way to achieve the goals Andrew Forrest was hoping to achieve with Fortescue Future Industries (FFI), his former hydrogen spin-out which was re-absorbed into FMG earlier this year.
This is not borne from a new relationship with Liebherr – itself and FMG have been engaged in such a fleet solutions relationship since 2022. All in all, with this new deal in play, Liebherr will have supplied upon its conclusion 475 vehicles and such assets to Fortescue.
Both companies expect the end result to be a mutual ability to boast having, or having supplied, the world’s largest “zero emission mining fleet.”
That goal, Fortescue noted, aligns with its “target to achieve Real Zero Scope 1 and 2 emissions across its Australian terrestrial iron ore operations by 2030.”
Good timing: from next July, Australia’s largest companies will have to report to ASIC Scope 3 emissions in their annual reports.
“What the hell does that mean?,” you’d be more than fair to ask. Here’s a rundown using the energy sector as an example. Scope 3 emissions are best understood using the oil industry.
Scope 1 and 2 emissions would be those greenhouse gases produced by the company in mining and collecting that oil. Scope 3 emissions, however, would include emissions produced by customers who burn that oil for their own activities, like driving around on Sundays, often bought at a servo hundreds of miles away.
While it’s not immediately clear what kind of costs may or may not be associated with high Scope 3 emissions in the future – right now it appears to be, if you’re cynical, a name and shame tactic from ASIC – it’s worth noting this is the backdrop before which Fortescue has spent $4B on this initiative.
(The hard Scope 3 numbers would also, conceivably, give enviro-activist lawsuits more ammo to work with.)
At any rate, if you think I’m being too harsh on Fortescue, I’m not.
Compare Fortescue’s electrification news on Wednesday to Air New Zealand, which ditched its 2030 emissions targets back in late July.
It’s surprising to me we’re not all hearing a lot more about the Scope 3 changes – at least one commentator described them as the biggest change we’ve seen from ASIC in a generation.
As with all things climate in the Australian investing landscape, it’s better to just ignore, ignore, ignore – unless you’re an insurance provider, of course.
FMG last traded at $18/sh.
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