Fortescue shares ease, but this major update could keep momentum building

Fortescue Ltd (ASX: FMG) shares are under slight pressure on Friday after the miner detailed the next stage of its Pilbara renewable rollout.

In morning trade, the Fortescue share price is down a modest 1.56% to $20.21.

Despite the dip, its 12-month gain sits at 35%, with the stock still well above where it traded this time last year.

Even with the shares easing today, the latest ASX announcement outlines plans to accelerate what it says is the world’s first replicable large-scale heavy industry green grid.

Let’s take a closer look at the release.

Fortescue brings forward giant Pilbara green grid rollout

The latest update is centred on Fortescue’s Pilbara operations, where it is moving faster on the rollout of an integrated renewable energy network. The goal is to replace diesel across some of its biggest mining assets.

Management said the system is expected to reach 290MW of installed renewable capacity by the end of this year, enough to power daytime “green processing” at its Pilbara iron ore facilities.

Later this year, the company expects the grid to run parts of its operations for 24-hour periods without fossil fuels, a milestone that moves its ‘Real Zero’ strategy ahead of the previously targeted December 2030 timeline.

By the end of 2028, Fortescue said the Pilbara network is expected to scale to 1.2GW of solar, more than 600MW of wind generation, and 4 to 5GWh of battery storage.

The company also said the wider profitable decarbonisation program is now targeting around 2GW of generation capacity, with future expansion phases potentially delivered over an 18-month period.

This includes electrification across fixed plant operations, AI-driven iron ore processing infrastructure, rail and port logistics, and on-site accommodation supporting around 10,000 workers.

Why investors may be looking beyond iron ore

Investors seem to be looking at what this project could mean beyond lower emissions.

Fortescue expects the first deployment phase to remove around US$100 million in fossil fuel costs next year. It is also anticipating site unit costs falling by at least US$2 to US$4 per metric tonne.

Management said the technology stack, battery systems, AI optimisation tools, and rollout model are all being designed to be replicable and licensable globally.

That gives investors a better sense of how this could become a second business alongside iron ore, which remains its biggest money maker.

Foolish bottom line

I think this is another positive step for Fortescue. The company is still using its iron ore business to fund growth, while also building out a second area through large-scale energy projects.

To me, that looks like the right direction for the long term. It adds diversification beyond iron ore. I think holding a sensible portion of shares in Fortescue could be a solid investment for investors comfortable with the ups and downs of commodity prices.

The post Fortescue shares ease, but this major update could keep momentum building appeared first on The Motley Fool Australia.

More reading

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• ASX 200 mining shares ride a rollercoaster in March quarter
• 3 reasons why this could be a great time to buy Fortescue shares!

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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.