Fortescue agrees to repay hydrogen grant for dumped Gladstone project ‘where required’

Fortescue has agreed to pay back taxpayer funds that were poured into a nixed green hydrogen project “where required”, following pressure from the Albanese Government.

The Andrew Forrest-controlled miner on Thursday revealed it would dump green hydrogen projects in Australia and the US as it struggles to find a commercial pathway to full-scale production of the clean fuel, which is produced by the electrolysis of water via renewable energy sources.

In its quarterly update, Fortescue said its Arizona hydrogen project in the US and the PEM50 project in Queensland’s Gladstone had been canned and an assessment was under way to re-purpose the assets and the land.

The news has raised eyebrows in Canberra, and the Labor Government has signalled its intention to reclaim any taxpayer money that went towards development of the Queensland project.

A spokeswoman for Industry and Innovation Minister Tim Ayres told The Australian that the Government believed it would be appropriate for Fortescue to hand back funds it received under the Modern Manufacturing Initiative.

“The decision not to proceed the PEM50 Hydrogen plant in Gladstone is a commercial matter for Fortescue,” the spokeswoman told the newspaper.

“However, if Fortescue does not proceed with the delivery of the MMI-funded Gladstone ­Electrolyser facility project it would be reasonable for the government to seek reimbursement for where the grant agreement hasn’t been fulfilled.”

Fortescue said it was in talks with the Federal and Queensland governments over the future use of the land.

“We have been upfront with the Government and will return funds where required under the grant agreement,” a spokeswoman said.

“Those conversations are already under way.”

Fortescue expects to book a $US150m ($227m) writedown after binning the two projects.

The West Australian in May revealed the $US150m Gladstone electrolyser manufacturing plant was in serious doubt after 90 workers were laid off across the site and Fortescue’s Perth headquarters. Mark Hutchinson quit as Fortescue’s green energy boss less than two weeks later.

These job cuts were the latest leg of a huge cull across the company’s sprawling green hydrogen team that started in July last year.

Fortescue in February said the re-election of Donald Trump jeopardised its $US550 million green hydrogen project in the western US state of Arizona.

It was earmarked for generous grants under the Biden administration but President Trump’s team appear to have poured cold water on those taxpayer funding hopes.