On the move Up Up Up, page-47

Twiggy dreams big, with a slap at Tesla too

The essence of Forrest’s bold vision is this.The world will be “toast” if it waits to move to net zero emissions by 2050, and so must harness renewable sources of power much faster than planned.While the world is throwing billions at renewable energy sources – Fortescue is part of this, with its plans to generate 235 gigawatts of wind and solar power – Forrest argues the biggest opportunity lies in green hydrogen.This is hydrogen made using renewable energy sources, including hydroelectricity and geothermal energy, which are Fortescue’s preferred energy sources.Fortescue’s long-term interest in green hydrogen has been well flagged, but the size of Forrest’s ambition is growing rapidly following last year’s global mission to sign deals with governments to explore green hydrogen.It is looking at the feasibility of projects that could generate 300 gigawatts of power – more than four times what Australia can produce, he says – with an ultimate goal of 1000 GW.Pilot planBut now there’s a next step, with Forrest saying Fortescue wants to start building a pilot plant to produce green steel made with its own iron ore and its own renewable energy, at this stage wind and solar.A commercial plant would follow in the next few years; presumably, this might eventually harness green hydrogen energy. Forrest says an Australian green steel industry could generate 40,000 jobs – offsetting the loss of the coal industry – if it could capture just 10 per cent of the world’s steel market.It’s a big, bold idea.Forrest expects there will be naysayers about the power of green energy, noting that Tesla founder Elon Musk has derided hydrogen fuel cell cars. In return, Forrest describes Musk as “someone who peddles a battery technology as green – when it runs on fossil fuel”.
Twiggy might not get a Christmas card from Musk anytime soon, but I am not sure the army of naysayers will be anything like what he faced when he decided to take on BHP and Rio Tinto with FMG. Forrest has the runs on the board and the capital to chase this vision, and while details are minimal, he appears he will take a sensible, staged approach.What will be fascinating is the reaction of Fortescue investors to this vision over time.Most will probably see it as something to think about way down the track. After all, hydrogen energy is very much in the development phase – Forrest concedes in his lecture that transporting the stuff remains the missing piece of the puzzle, albeit one being feverishly worked on – and with iron ore prices sky high, the mountains of cash the miner is generating are far more important.But Forrest does point to a long-term repositioning of Fortescue, from the pure-play iron ore miner it has been for almost two decades into something more complex.To be clear, that’s not necessarily a bad thing – many of the world’s great companies start with a singular focus before branching out into areas that prove even more lucrative; Apple, with its push from personal computers to smartphones or Amazon, which pushed from retail into web services.But for shareholders who have bought Fortescue for exposure to iron ore, its shift towards renewable energy, and then potentially steel-making, does raise an interesting question about the changing nature of their investment.