Fortescue Metals Group Ltd
(Fortescue, ASX: FMG) advises that Fortescue Future Industries (FFI) has
entered a global strategic collaboration with energy infrastructure developer
Tree Energy Solutions (TES) which aims to accelerate the development of a world
leading green hydrogen and green energy import facility in Germany. The
investment of €130 million (US$127 million) will be funded by FFI’s unutilised
capital commitment and provides FFI with a pathway for access to critical
infrastructure to execute its strategy.
Through the agreement, FFI subsidiary Netherlands
Fortescue Future Industries Holdings B.V. will invest €30 million (US$29
million) to become a shareholder in Tree Energy Solutions B.V. as well as
invest €100 million (US$98 million) in the construction of the TES terminal in
Wilhelmshaven, Germany, and be a major shareholder with a 30 per cent stake in
Deutsche Grüngas und Energieversorgung GmbH (a subsidiary of TES), the project
company that will build the TES Green Energy Hub in Wilhelmshaven, Germany.
TES is developing a portfolio of terminals globally that
will enable transportation of green energy. The first phase of this partnership
is to jointly develop and invest in the supply of 300,000 tonnes of green
hydrogen with final locations being currently agreed, and a financial
investment decision targeted in 2023.
The first delivery of green hydrogen into TES’ terminal
in Wilhelmshaven, Germany is anticipated to take place in 2026. Initial
collaboration projects will be focused on Australia, Europe, the Middle East
and Africa.
The new strategic collaboration demonstrates FFI’s and
TES’ commitment to reducing global emissions by accelerating the import and
production of green molecules as a lower cost alternative to fossil fuels. FFI
joins a group of investors in TES comprised of international financial
institutions and multinational energy companies including E.ON, HSBC, UniCredit
and Zodiac Maritime.
The collaboration will combine FFI’s market leading
expertise in developing large scale renewable energy production, with TES’s
unique sustainable business model and access to the European green hydrogen
market.
In accordance with Fortescue’s capital allocation
framework, the investment will be funded by FFI’s unutilised capital commitment
at 30 June 2022 of US$1.1 billion. To reflect this investment, guidance for
FFI’s anticipated capital expenditure in FY23 is revised to US$230 million
(from US$100 million). The guidance for FFI’s anticipated operating expenditure
of US$500 – US$600 million is unchanged.
Fortescue Executive Chairman, Dr Andrew Forrest AO said,
“The United Kingdom and Europe urgently need green solutions to replace fossil
fuels and this investment will enable Europe to do exactly that. Not in 2050,
but in four years from now.
“From the beginning of FFI, our philosophy was to drive
performance across the entire new renewable GH2 value chain while
delivering returns to our shareholders. This investment reinforces this
commitment and is a significant step forward in FFI’s journey to become one of
the world’s largest green energy producers.”
FFI CEO Mark Hutchinson said, “This investment supports
the delivery of Fortescue’s supply agreement with E.ON, Germany’s largest
energy distributor, following our announcement in March this year to supply
five million tonnes of green hydrogen to Germany, with supply commencing from
mid-decade.”
TES CEO, Marco Alvera’ said, “We are delighted
to announce this partnership which marks a new milestone in delivering
scalable, affordable green hydrogen as well as securing renewable energy
production. This agreement is another stepping stone in building TES as one of
the leading hydrogen players in the world to accelerate the energy transition
with the most cost-effective, bankable and scalable green alternative to
today’s fossil fuels.”
