To infinity and beyond! Here’s why Fortescue (ASX:FMG) is spending $50m developing a brand new toy

Fortescue Metals Group Limited (ASX: FMG) is planning to spend many millions of dollars to create a new type of train.

The ASX mining giant has an important goal of decarbonising its business, as well as helping the world’s heavy industry reduce emissions as well. These efforts are coming from Fortescue Future Industries (FFI), the green division of Fortescue.

Infinity train

The acquisition of the high-performance battery business Williams Advanced Engineering (WAE) has been completed. WAE will stay “strongly independent” but it will help Fortescue decarbonise.

With the completion of the acquisition, WAE and Fortescue announced the development of an ‘Infinity Train’, which will be a world first and have zero emissions. The company has been working on decarbonising its train operations for a while now.

Fortescue explained that the regenerating battery electric iron ore train project will use gravitational energy to fully recharge its battery electric systems without any additional charging requirements for the return trip to reload.

But there are other benefits to this project as well. It will reportedly lower Fortescue’s operating costs, create maintenance efficiencies and productivity opportunities.

The company plans to become a major player in the growing global market for green industrial transport equipment as it develops and distributes this globally. The mining giant hopes this will provide “great value” for Fortescue shareholders.

How much will this cost?

Studies and development costs for the Infinity Train are expected to be US$50 million over the next two years and will be classified as operating cost efficiencies, with the studies to refine the capital estimate and schedule.

Fortescue’s current train operations

The ASX mining share currently has 54 operating locomotives that hauls 16 train sets. Each train set is around 2.8km in length and has the capacity to haul 34,404 tonnes of iron ore in 244 ore cars.

The rail operations amount to around 11% of Fortescue’s scope 1 emissions. These are emissions that Fortescue produces itself, not the emissions of its customers.

Fortescue is planning for its diesel consumption and associated emissions to be eliminated once the infinity train is fully implemented. In FY21 it used 82 million litres of diesel. The company is planning to be diesel free by 2030.

Leadership commentary

Fortescue CEO, Elizabeth Gaines, said:

The Infinity Train has the capacity to be the world’s most efficient battery electric locomotive. The regeneration of electricity on the downhill loaded sections will remove the need for the installation of renewable energy generation and recharging infrastructure, making it a capital efficient solution for eliminating diesel and emissions from our rail operations.

Fortescue share price snapshot

Over the last month, the Fortescue share price has dropped over 10%. But over the past four months it has risen by around 30%.

The post To infinity and beyond! Here’s why Fortescue (ASX:FMG) is spending $50m developing a brand new toy appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns 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 Bruce Jackson.

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