This morning, the Fortescue Metals Group Limited (ASX: FMG) share price has exited a short-lived trading halt. The company was clarifying details around a deal made by its renewable energy arm, Fortescue Future Industries, to build a "hydrogen bridge" to Europe.
The deal will see Fortescue Future Industries supplying the continent with up to 5 million tonnes of green hydrogen annually by 2030.
That's enough hydrogen to replace around a third of the calorific energy Germany imports from Russia.
Fortescue Metals' shares went on ice this morning, pending an announcement release. That announcement clarified details around the potential cost of the deal.
At the time of writing, the Fortescue Metals share price is $19.58, 0.46% higher than its previous close.
Let's take a closer look at today's news from the iron ore giant's hydrogen-focused green energy entity.
Fortescue Metals share price thawed on cost clarification
The Fortescue Metals share price was put in the freezer this morning amid news Fortescue Future Industries has entered a memorandum of understanding with E.ON to supply Europe with green hydrogen.
It was inked in Berlin by Fortescue Future Industries and E.ON. E.ON operates one of Europe's largest energy networks and infrastructure and provides energy to 50 million customers.
The agreement caused chaos on the market this morning, with Fortescue Metals entering a trading halt before clarifying the details of its projected cost.
Fortescue Metals and Fortescue Future Industries chair and founder Dr Andrew 'Twiggy' Forrest initially told media the supply agreement will cost a minimum of US$50 billion (AU$66.6 billion).
In today's release to the ASX, the company stated:
The expenditure described is a high-level assessment by the chairman of what such a major
project may cost and is appropriate in the environment the statement was made to provide context
and scale of the potential of the [memorandum of understanding].
The company has made no commitment to the expenditure. What's more, any decision to spend that amount of cash would require approval from its board.
Fortescue Metals also said that, on top of its commitment to spend 10% of its net profits after tax (NPAT) on its green energy leg, it's working with financiers to confirm project funding for green energy.
More details on Fortescue Future Industries' 'milestone' deal
Fortescue Future Industries and E.ON will take to the books before the metaphorical shovel breaks any ground. They've agreed to research how to supply the renewable energy commodity as fast as possible.
Both have their sights on creating a 5 million tonne-per-annum green hydrogen supply chain.
E.ON CEO Leo Birnbaum said the partnership is a "milestone" in Europe's energy transition.
"Two major international companies are joining forces to build a 'hydrogen bridge' from Australia to Germany and the Netherlands, based on shared values and the joint capability of realising the scale of such a project," said Birnbaum.
That "hydrogen bridge" will also help steer Europe away from its reliance on Russian energy fuel, said Forrest.
Fortescue Future Industries expects Australia will be the birthplace of much of Europe's future green hydrogen. FFI's other global projects will also have a role in the commodity's production.
E.ON will then distribute the energy commodity across Europe. There, it will help to decarbonise thousands of enterprises in Germany and the Netherlands, as well as other European cities and communities supplied by E.ON.
According to Fortescue Metals CEO Elizabeth Gaines, the deal is a "decisive step forward in FFI's journey to become one of the world's largest green energy producers."
