Green machine: Here’s why the Fortescue share price is rising today

Fortescue signs deal for trucks to keep zero-emissions goal on track.

| More on:
Female miner on a walkie talkie.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Fortescue is one step closer to decarbonising its operations after revealing a purchase order for 120 zero-emission haul trucks
  • The trucks will use green technology developed by Fortescue Future Industries and Williams Advanced Engineering
  • At the time of writing, the Fortescue share price is rising by 2%

The Fortescue Metals Group Limited (ASX: FMG) share price is up 2% in early trading today after the company announced a major deal for zero-emission haulage trucks.

The S&P/ASX 200 Index (ASX: XJO) is also up by 0.93% at the time of writing.

Fortescue has a decarbonisation goal of being net zero in terms of its scope 1 and scope 2 emissions by 2030. A partnership with Liebherr, one of the world’s largest construction machine manufacturers, has been revealed and it’s seen as a “significant step” by Fortescue’s CEO.

Partnership deal

The Fortescue share price is on the rise after the company announced after market close yesterday that it will purchase 120 haul trucks from Liebherr, with the delivery aligned with its fleet replacement and sustaining capital expenditure forecast.

The commitment to buy 120 trucks represents around 45% of its current operations haul truck fleet.

The partnership is also about developing ‘green’ mining haul trucks for integration with the zero-emission power system technologies being developed by Fortescue Future Industries (FFI) and Williams Advanced Engineering (WAE).

The ASX mining share noted this “accelerates the opportunity to commercialise zero-emission power system technologies in heavy industry applications”.

In terms of Fortescue’s own emissions, truck haulage used approximately 200 million litres of diesel in FY21 and accounted for 26% of the company’s scope 1 emissions.

When will the trucks be delivered?

The phased supply of haul trucks is expected to start after a two-year joint development period which will enable the development and integration of Fortescue’s proprietary-owned power system into Liebherr’s truck base.

Liebherr will supply mining haul trucks to the ASX mining share in both battery electric truck and fuel cell electric truck configurations, as per Fortescue’s requirements.

It’s expected the first of the zero-emission haul units will be “fully operational” at the company’s mining sites by 2025, with another goal of having the units available for commercial sale from that time.

Leadership commentary

Decarbonising Fortescue’s operations and monetising the development efforts by FFI are two of Fortescue’s biggest focus areas right now.

Fortescue CEO Elizabeth Gaines said:

The signing of this contract with Liebherr makes a significant step in the delivery of our industry-leading decarbonisation target to achieve net zero scope 1 and 2 emissions by 2030.

We strongly believe that enhancing technology is key to addressing climate change and we are investing in renewables and new decarbonisation technologies to transform our mining fleet to run on green renewable energy.

This agreement builds on the considerable value already created through Fortescue’s acquisition of WAE and demonstrates the significant long-term opportunity for Fortescue to commercialise green power system technologies to the broader heavy duty mobility market.

Gaines went on to say these will be some of the world’s first zero-emission large mining haul trucks. She said it was aimed at establishing an important new business growth opportunity as it pivots to becoming an integrated green energy and resources company.

Fortescue share price snapshot

Prior to today’s movement, the Fortescue share price was flat in 2022, having gone up by just 0.2%.

It is down 11.5% over the past year but is up 7% over the past month.

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.

More on Resources Shares

A wide-smiling businessman in suit and tie rips open his shirt to reveal a green t-shirt underneath
Resources Shares

‘Self-interested billionaires’: Fortescue share price climbed today despite union war of words

Fortescue’s hydrogen plans received some negative attention today.

Read more »

A woman lies back and relaxes in her boat with a big smile on her face as it floats on the rising tide.
Resources Shares

Why is the Lake Resources share price rebounding 5% on Monday?

Why have Lake Resources shares shot up 5% today?

Read more »

a man in a high visibility vest and hard hat holds a thumbs up at a mine site with heavy equipment in the background.
Resources Shares

3 ASX mining shares soaring between 6% and 20% on new finds

We take a look at what these three ASX mining shares discovered.

Read more »

Three coal miners smiling while underground
Resources Shares

Why India can’t get enough of Aussie coking coal and which ASX shares have exposure

Some ASX coal mining shares could benefit from India’s strong demand for coal.

Read more »

a man in high visibility vest and hard hat at the wheel of heavy mining machinery looks backwards out of the cabin window.
Resources Shares

How did the Fortescue share price respond last earnings season?

Here's what happened to the Fortescue share price when the company dropped its first-half results.

Read more »

A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.
Resources Shares

Here’s why I dig the Rio Tinto share price right now

There’s a good reason to go hunting for shares of this ASX miner right now.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Resources Shares

Is the Santos share price a buy following the energy giant’s latest acquisition?

Santos has slipped, should investors seize the opportunity?

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Resources Shares

Looking to buy BHP shares? Here’s what to watch when the mining giant reports this week

What kinds of things should investors be looking at in the Big Australian's upcoming result?

Read more »