Mining mogul Andrew Forrest puts money where the mouth is on green hydrogen

No one can accuse Andrew Forrest of lacking ambition.

The billionaire entrepreneur made a fortune by dismantling the West Australian iron ore duopoly of mining powerhouse BHP Group and Rio Tinto – something skeptics say can’t be done.

He now wants to make another fortune by helping save the planet and turning the mining company he controls — Fortescue Metals Group — into a global leader in renewable energy, and green hydrogen in particular.

During a recent visit to London for the FT Hydrogen Summit, Australia discussed its plans for FMG, denounced companies promoting blue hydrogen, and questioned Tesla’s Elon Musk’s green credentials.

Forrest reckons his green energy unit, Fortescue Future Industries, could go from a standing start to producing 15 million tonnes of green hydrogen per year by 2030 — just 5 million tonnes less than the goal set by the European Commission over the same period.

Elon Musk knows that almost every time a Tesla is plugged into almost every grid in the world, it just burns coal and oil and gas. I mean, it doesn’t do anything for the environment

He believes green hydrogen can be produced in places where there is access to cheap renewable energy and then exported around the world in the form of ammonia or other hydrogen derivatives. The view is that it will become a globally traded commodity.

Not everyone shares his confidence. Converting sunlight to hydrogen, then ammonia, and finally back to electricity, results in more than 80 percent energy loss, according to some academics. Even so, many supporters think that it can be successful if it is bundled with carbon pricing.

To that end, FFI has signed a long list of non-binding supply agreements, including deals with German utility company Eon and British firm JCB.

Analysts estimate Forrest will need to build around 200GW of wind and solar capacity to reach its 2030 target, at a cost that could run into the hundreds of billions of dollars.

Forrest believes green hydrogen can be produced where there is access to cheap renewable energy and then exported worldwide © Michael Sohn/AP

Asked how he planned to finance his plans, Forrest pointed to FMG’s annual results, noting that the company made a profit before interest, taxes and depreciation last year of $16 billion, and a net profit of $10 billion after tax, on the back of rising prices for iron ore.

“Listen, I’m building a $50 billion iron ore infrastructure in the Pilbara,” he said at a summit in London. “I am very used to executing large capital projects at a lower cost than what our competitors are doing.”

About his deal with Germany’s Eon, Forrest said: “They have asked for 5 million tonnes [of green hydrogen a year by 2030] and they will get it.”

To support the nascent green hydrogen industry, Forrest asked the government to provide appropriate policy support. He cites US tax credits worth up to $3 per kilogram for clean hydrogen, and German contracts-for-difference – subsidies that guarantee a minimum price for producers – as good examples.

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He said blue hydrogen, which is produced from natural gas and uses carbon capture and storage technology to deal with emissions, is a dangerous nuisance that risks “destroying legitimate green companies and initiatives” by claiming to be low carbon.

Forrest said he had never met a scientist who thought gas buried underground, via CCS technology, was leaking at less than 1 percent a year, warning that “it leaks out much faster than that”.

“That means it all goes back to the exact century when you had to get rid of it,” he said. “That’s not carbon sequestration, that’s green leaching.”

Responding to a recent comment made by Tesla’s Elon Musk that hydrogen fuel cells, which can be used to power trucks and cars, are “very stupid”, Forrest said electric vehicles are not always as environmentally friendly as they are portrayed to be.

“He [Musk] know that, almost every time a Tesla is plugged into almost every grid in the world, it just burns coal and oil and gas,” he said. “I mean, it doesn’t do anything for the environment. So his ‘confused folly’ was chalked up.”

Asked about his recent decision to take back control of FMG as executive chairman, Forrest said turning a mining company “highly successful and globally respected” was two big jobs.

“One, to maintain that reputation and grow it; and secondly, to make it completely green,” he said. “FFI’s job is scary. . . because you are dealing with new technologies that are changing rapidly before your eyes. So, for the next two or three years, I just don’t want to let it go. I want to be there guiding the company like I did in the early stages.”

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