Why Andrew Forrest thinks the iron ore price will stay above $US80
![Andrew Forrest is paying no mind to teetering iron ore prices.](https://images.thenightly.com.au/publication/C-15727870/26a4910f5ec4a23f28d26829b288f9da186f0572-16x9-x0y194w2148h1208.jpg?imwidth=810)
Mining billionaire Andrew Forrest is not worried about teetering iron ore prices, instead spruiking the “wall of buyers” waiting to buy tonnes of green iron from an as-yet-to-be-built Pilbara plant in 12 months time.
Only weeks after announcing the axing of 700 jobs, he and chief executive Dino Otranto turned the first sod at a stretch of brown dirt at a fledgling “green energy hub” on Friday at Christmas Creek, marking the ceremonial start to building a hydrogen-powered plant capable of converting iron ore into a “near zero emissions” precursor metal for steelmaking.
It marks the latest hardline target in Mr Forrest’s broader mission to sell iron ore and steel precursors produced with zero emissions, which will mean getting Fortescue’s mining operations running at net zero by the end of this decade.
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By continuing you agree to our Terms and Privacy Policy.It comes after the company last month ditched its long-touted goal of producing 15 million tonnes of green hydrogen a year by 2030.
Further, prices for the commodity funding the multibillion-dollar endeavour — and Fortescue’s primary revenue driver — have started to show signs of weakness, with warnings of a “long harsh winter” for steelmaking by Chinese major Baowu.
Iron ore futures dropped under $US100 mark this week.
Broadly, however, Mr Forrest said he believed there was support for iron ore prices at $US80 a tonne, but that it was when “other parts of the industry start to go out of business.”
“We’ve seen that before many times so I think there is a natural floor there,” he said.
![Fortescue (FMG) have officially opened their Green Energy Hub at the Christmas Creek mine site in the Pilbara. Pictured is FMG chair Andrew Forrest, FMG CEO Dino Otranto and FMG head of decarb delivery Sinead Booth at the mine site.](https://images.thenightly.com.au/publication/C-15727870/a2fe2760e02daea2f7b606bcb2c66115d0beb36a.jpg?imwidth=810)
Longer term, Mr Forrest indicated Fortescue would be pushing further into the next step of so-called green iron ore and expanding on the green iron metal it plans to produce 1500 tonnes a year of from Christmas Creek from 2025.
“I’d say we don’t intend as Fortescue to compete against that ($US80), we’ll be producing a new product which the world wants which is green iron ore,” he said.
“If we needed to place 100 million tonnes of green metal we could do that this afternoon, there are literally a wall of buyers out there for green metal. We can take big steps but not if we don’t take a whole heap of fast little steps.”
Mr Otranto said the new green iron metal facility would be “commercial from day one”.
“Within 12 months we’ll have this facility completely built, it’ll be commercial in scale. And we have an intention to sell, that’s why I was recently in China. If we had this built today we could sell all of that today,” he said.
“Even though China is going through a few bumps in terms of its traditional steelmaking industry, what it absolutely needs is . . . green commodities from Australia.”
Fortescue has plenty of pots on the boil to decarbonise and produce green hydrogen commercially but will need to scale up dramatically over the next six years to meet its goals.
The miner is producing about 530kg of hydrogen from a liquefied and gaseous hydrogen plant at Christmas Creek a day.
The single hydrogen-powered truck Fortescue has built and is commissioning — the first of its kind in the world according to the company — needs 380kg to run for about 10 hours.
Stepping up to commercial-scale hydrogen — such as the 15mtpa target Fortescue has abandoned — rests on finding cheaper sources of electricity.
Energy lead Mark Hutchinson at its half-year update said that major hydrogen projects were “not viable” while electricity costs remained outside the $US30 ($45.70) range.
Plans to decarbonise its sprawling stretches of iron ore rail operations are also slightly behind, with delivery of two battery electric locomotives likely to be delayed until the end of the year.
Fortescue says it has in the meantime been trialling an ammonia-powered locomotive.
A wave of 700 mostly white-collar job cuts across its iron ore and energy divisions followed the abandonment of its green hydrogen target.