Australian metals company and leading hydrogen project developer Fortescue has deprioritised a number of green hydrogen production projects and has said it is unlikely to reach its target to produce 15mt/yr of the fuel by 2030.

The firm will still aim to reach the production goal, but at a later, as-yet unspecified, date.

“We must continually evolve to ensure we remain lean and impactful,” said Fortescue executive chairman Andrew Forrest in a statement.

The firm has deprioritised three green hydrogen projects in its portfolio: the 140,000t/yr Coyote project in British Columbia, Canada; the 40,000t/yr Centralia project in the US Pacific Northwest; and the Grand Inga project in the Democratic Republic of Congo.

Fortescue had been waiting for final guidance on the US Inflation Reduction Act’s (IRA's) 45V tax credit to enable it to go ahead with the Centralia project, but this has been repeatedly delayed.

“And even when it does eventually get published, it could get attacked in court due to the recent Supreme Court ruling to overturn the so-called Chevron deference. It is therefore not a surprise Fortescue have deprioritised the project,” Bloomberg NEF’s head of hydrogen research, Martin Tengler, told Hydrogen Economist.

The Chevron deference was a decision of the US Supreme Court that laid out when federal courts were required to defer to the government’s interpretation of federal laws.

The Supreme Court overturned the deference in a recent legal case, which could set a precedent for the IRA rules to be challenged in litigation.

“We must continually evolve to ensure we remain lean and impactful,” Forrest, Fortescue

Remaining Priorities

Fortescue will continue to develop the two projects on which it has taken FID—the 11,000t/yr Arizona Hydrogen Hub and the 8,200t/yr Gladstone PEM50 project.

It will also continue to actively push towards FID the 40,000t/yr Holmaneset Project in Norway and the 300,000t/yr Pecem Green Hydrogen Hub in Brazil.

A spokesperson for the company noted these projects were in locations with reliable and cheap decarbonised electricity resources—factors that have provided a significant cost barrier to other projects where not available.

“Fortescue is focusing hard on… using cheap electrons to produce green hydrogen projects in countries where there is abundant renewable energy, such as Norway and Brazil, and the rest of the world once it gets its act together,” said the statement from Forrest.

The firm’s remaining projects in Argentina, Egypt, Jordan, Kenya, Morocco, New Zealand, Oman and the US will all still have teams working on them, but are not an immediate priority for development by the company.

“Electricity prices and electrolyser prices have remained stubbornly high,” said Tengler.

A recent study focused on Europe found that hydrogen project investment costs have increased significantly in recent years due to the higher cost of energy, raw materials and labour.

Redundancies

The moves come as part of a reorganisation of the company’s structure as it integrates its metals and energy divisions. The reorganisation will see 700 redundancies across the firm.

“The company must continually evolve to ensure it remains lean, is best positioned to deliver on its strategy and generates the maximum value for shareholders,” Fortescue said in a statement to the Australian Stock Exchange.

Forrest added in his statement that the company continues to support the Australian government’s AUS $2/kg ($1.35/kg) subsidy mechanism for green hydrogen production and that Fortescue’s green iron plans in Australia will still rely on green hydrogen.

“Our decarbonisation programme is world leading and our Australian operations will be Real Zero—no fossil fuels—by 2030,” said Forrest.

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Author: Tom Young