Can you buy shares in Fortescue Future Industries?

Is it possible to buy a piece of Fortescue's green energy division?

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Key points

  • Fortescue Future Industries is looking to become a key enabler of the world’s decarbonisation efforts
  • We can’t buy shares of it directly, as it’s part of the overall Fortescue business
  • It’s looking to produce 15mt per annum of green hydrogen

With a market capitalisation of $54 billion, Fortescue Metals Group Limited (ASX: FMG) is one of the biggest businesses on the ASX. But are investors able to buy Fortescue Future Industries (FFI) shares?

Fortescue is best known for being a large ASX mining share with a focus on iron ore, along with its heavyweight peers Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

But there is elevated interest in Fortescue's business segment known as Fortescue Future Industries.

FFI describes itself as a "global green energy company committed to producing green hydrogen, containing zero carbon, from 100% renewable sources". Green hydrogen, when used, primarily produces water.

FFI is focused on "leading the green industrial revolution, developing technology solutions for hard-to-decarbonise industries, while building a global portfolio of renewable energy, green hydrogen and green ammonia projects".

One of its key goals is to help decarbonise Fortescue's operations by 2030.

Can we buy shares of Fortescue Future Industries?

FFI is not a separately listed business on the Australian Stock Exchange. So investors can't directly buy shares of FFI.

But investors can buy shares of the ASX-listed Fortescue which owns all of Fortescue Future Industries.

Some experts believe that FFI is already worth tens of billions of dollars. According to reporting by the Australian Financial Review, Fortescue chair Andrew Forrest has been approached by investment banks. They've suggested Fortescue Future Industries is already worth US$20 billion if it was to go through the process of an initial public offering (IPO).

So, if investors were to apply that to Fortescue's overall market capitalisation, it would represent a significant chunk of the company's value. It also depends on how much investors would value Fortescue's iron business.

What are FFI's long-term goals?

Certainly, Forrest has big goals for Fortescue Future Industries. He said the following in Fortescue's FY22 result:

We must become the Saudi Arabia, not of oil, but of green hydrogen, we can become the Asia of green iron too, if we are prepared to commit to it. Think the North West Shelf – not of climate-threatening methane, but of carbon-free green ammonia, for every ship in the world. Please don't think it can't be done, it can.

The company is investing to create a global portfolio of green energy projects to supply 15 million tonnes per year of renewable green hydrogen by 2030.

FFI has already signed deals with companies in the northern hemisphere for supplying green hydrogen.

In October 2021, it signed a memorandum of understanding (MoU) with UK-based construction company JCB and Ryze Hydrogen for the purchase of 10% of FFI's global green hydrogen production.

It has also signed an MoU with German electricity company E.ON to deliver up to five million tonnes per annum of green hydrogen by 2030. This one deal represents approximately a third of Fortescue Future Industries' future production to 2030.

Fortescue has also made a few acquisitions and partnerships to boost the decarbonisation and earnings prospects of FFI. For example, it acquired Williams Advanced Engineering, a leading provider of high-performance battery and electrification technology.

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.

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