Could the winds of change be blowing for Fortescue shares?

Fortescue Metals Group Limited (ASX: FMG) shares could be impacted by the latest plans of Fortescue Future Industries (FFI).

While Fortescue may be best known as a large iron ore miner, it now has plans to turn itself into an integrated resources and green energy business. It’s aiming to take a global leadership position in green energy and technology and is committed to producing zero carbon green hydrogen.

While FFI has been working on a global portfolio of energy projects, the Australian Financial Review has reported on the potential latest project that could be closer to home — in Western Australia.

Wind farms for Esperance?

Fortescue Future Industries has reportedly signed exclusivity agreements with some farmers as it tries to gain access to land. It wants to build “hundreds” of wind turbines near Esperance and “turn the region into a green hydrogen hub”. Another part of the plan is looking for port sites near Esperance.

According to the AFR, if farmers agree to give FFI access to a portion of their land, they could receive annual fees of “$15,000 or more” per wind turbine. They will also get a “low-cost” supply of green ammonia to fertilise their land.

One of the people looking to make this happen is Maia Schweizer. She’s in charge of FFI’s work in Western Australia, South Australia, and the Northern Territory.

She said the company needs a new port so it can import construction materials and export green ammonia, and potentially green hydrogen.

The AFR quoted Schweizer, who said:

The short answer is we will almost certainly need a new facility somewhere along the coastline.

We’ve done a desktop review to identify some potential sites. That’s not a simple matter so now the real work begins of engaging with the local community and First Nations and finding a suitable location for that to happen.

How much will this cost?

One of the hurdles that Fortescue Future Industries may need to clear is the cost of this project.

The AFR reported that it could cost “tens of billions of dollars” to build the port, at least one desalination plant, an electrolyser, an ammonia production plant, and a network to connect all the wind turbines across all the farms involved.

Is there local interest in the plans?

Schweizer suggested that the project will need to be large enough to export to other markets. She thinks the reception from the community has been “really, really quite positive”.

There was feedback that farmers being able to diversify their revenue and reduce their carbon footprint in a decarbonised world market was “really promising”.

The AFR also quoted Karl Raszyk, who farms between Cascade and Scaddan.

Raszyk said:

I think most of the farmers are on the same page looking to reduce their emissions long-term and this project allows them to do that in a big way in the form of green fertiliser, or green ammonia.

One day we’d like to be able to sell green food like Andrew Forrest is trying to sell green steel.

The attraction of green ammonia for Raszyk is that it would provide nitrogen. This would replace fossil fuel-produced fertiliser, which makes up about 70% of the carbon footprint of the grain farms.

Fortescue share price snapshot

Since the beginning of 2022, Fortescue shares have fallen 3.7%.

The post Could the winds of change be blowing for Fortescue shares? appeared first on The Motley Fool Australia.

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More reading

• Is the Fortescue share price a buy going into the FY22 result?
• What’s with the Fortescue share price on Monday?
• Could this be set to boost ASX 200 iron ore shares?
• Why the Fortescue share price is on watch next week
• Worried about the iron ore price? Why the need for it ‘ain’t going anywhere’: broker

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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