The Fortescue Metals Group Limited (ASX: FMG) share price is jumping 9% this morning, making it one of the top-performing S&P/ASX 200 Index (ASX: XJO) shares. It could be getting an extra boost from its plans to collaborate in Asia to make green steel.
Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) is also currently the best-performing sector. It's up more than 3% following news China is easing some of its COVID-related restrictions.
Amid the news, ASX 200 iron ore majors BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (AS: RIO) are also soaring in early trade today, up 4.61% and 4.78%, respectively.
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Asian green steel collaboration
Fortescue Future Industries (FFI) is the division of Fortescue that plans to produce green hydrogen and green ammonia.
FFI has agreed to immediately work with Indonesia's largest private steelmaker to see if green hydrogen and green ammonia can be used in GRP's steelmaking operations in the future, according to reporting by the Australian Financial Review.
Gunung Raja Paksi Tbk (GRP) is a member of Gunung Steel Group. Established in 1970 in North Sumatra, GRP is located in Cikarang Barat, West Java Province and covers more than 200 hectares.
In its website, GRP says it produces 2,200,000 tons of "high-quality" steel annually certified by local and international certification organisations. Its goal is to develop a better future.
The agreement with FFI was announced at the B20 summit in Bali, a business forum that precedes G20 meetings later in the week.
Are bigger plans in store?
Fortescue leader Andrew Forrest said that FFI was in "green steel discussions" in Europe that could be on a larger scale than the GRP collaboration. Could this have an even larger impact on the Fortescue share price?
Forrest said that the GRP deal was the company's biggest play in Asia.
He also noted that China would be watching the collaboration "closely". Forrest said:
The Chinese steel industry is many times the scale of Indonesia and has significant pollution issues.
If there is a way they can produce all the steel the country needs without destroying the local environment, that's what they'll do.
It wasn't reported how exactly green hydrogen or green ammonia would be used in the steelmaking process.
Green iron ore
But, Fortescue has already announced that it will make a US$6.2 billion capital investment by 2030 to decarbonise its iron ore operations by 2030 and achieve "real zero terrestrial emissions", referring to scope 1 and scope 2.
The company will avoid 3 million tonnes of carbon dioxide equivalent emissions per annum when fully achieved. It will also save net operating cost savings of US$818 million per annum from 2030, at prevailing market prices of diesel, gas and Australian carbon credit units
It said that there would be cumulative cost savings of US$3 billion by 2030, and capital payback would be achieved by 2034 at prevailing market prices.
Fortescue added that this move would establish a "significant new green growth opportunity by producing a carbon-free iron ore product and through the commercialisation of decarbonisation technologies".
Fortescue share price snapshot
The Fortescue share price is up 9.09% at $19.38 at the time of writing. Over the last month, Fortescue shares have lifted more than 13% and are up a hefty 31% since the start of November.
