Fortescue Metals Group Limited (ASX: FMG) has some ambitious plans when it comes to green energy.
Namely, the S&P/ASX 200 Index (ASX: XJO) iron ore giant is looking to become the global leader in the production of green hydrogen.
Green hydrogen, if you’re not familiar, comes from splitting water molecules (H20) into their elemental parts. Oxygen and hydrogen. With sustainable energy sources used in the process, it essentially produces zero carbon emissions.
Fortescue Future Industries
Fortescue Future Industries (FFI) is the green energy offshoot of the iron ore business.
FFI has a bold goal of producing 15 million tonnes of green hydrogen annually by 2030. A goal not everyone believes is achievable.
But that’s not stopping chairman and CEO Andrew ‘Twiggy’ Forrest from ploughing ahead.
As the Motley Fool reported, among other ventures, FFI is partnering with Airbus to develop green hydrogen for aircraft. FFI is also investigating setting up future green hydrogen projects in Papua New Guinea and Argentina, potentially opening up vast new regional supply routes.
While all that sounds promising, Fortescue Future Industries hasn’t produced any green hydrogen yet.
Which brings us to…
How soon can FFI start making money from green hydrogen?
Addressing the hydrogen conference in Barcelona, Spain, Forrest said he expects FFI will be producing commercial quantities of green hydrogen “inside the next two or three years”.
Earlier this week Twiggy revealed he’s temporarily stepping back in as CEO of Fortescue. The company has as yet failed to find a suitable replacement for outgoing CEO Elizabeth Gaines, who is stepping down in August.
Forrest relinquished his role as CEO back in 2011.
Under a new company structure, FFI and Fortescue will each have their own CEOs, both of who will report to the Board.
Forrest seems confident with the arrangement, saying (quoted by The Australian):
I’m happy to call myself a Plan B and from a shareholder perspective, the response we’ve had is ‘that’s a bullet proof plan B’. We will be making the appointments and having people join us when their current agreements allow.
As far as the difficult road ahead yet in transitioning to a global green hydrogen producer, he added:
It takes immense courage to pivot your successful business away from that successful business and into also a huge new industry where this has never been done. That’s where we’re breaking new ground. This is raw courage and has to be done on great scale.
How has the ASX 200 iron ore giant been tracking
Up 1.9% in early morning trade, the Fortescue share price is now just about flat for the year.
That compares to a 6% loss posted by the ASX 200.