Fortescue Metals to manufacture EV batteries with US government financial support

About Fortescue Metals Group Limited

Fortescue Metals Group Ltd (‘Fortescue‘, the ‘Group‘, ASX: FMG) is Australia’s third-largest iron ore producer, conducting its operations in the Pilbara region of Western Australia, from three mining hubs that are supported by fully integrated rail and seaport facilities located at Port Headland. These facilities are complemented by a tug fleet and eight purpose-built 260,000 tonne capacity Fortescue Ore Carriers.

The Group has recently embarked on a decarbonisation strategy and is progressing to become an integrated player in the renewables and green resources sector, on a global scale. It is currently developing a global portfolio of renewable energy and green hydrogen projects. The strategy seeks to use 100 percent renewable energy to produce green electricity, green hydrogen, green ammonia and other green industrial products, to de-carbonise the steel, power generation and transport industries. This strategy is in support of Fortescue’s stated intention to achieve carbon neutrality in its own operations by 2030 and in its customers’ operations by 2040.

Automotive battery manufacturing plant to be built in US

Fortescue’s clean energy aspirations are advancing with the establishment of a manufacturing plant to produce automotive and heavy-industry batteries and Electric Vehicle (EV) fast chargers with US government financial support. The plant will cost US$210 million to build, including US$106 million in new machinery and equipment. The factory will create 600 new jobs when fully operational. The facility is located in Detroit at the birthplace of Ford’s first factory where it produced cheap cars at scale. Production on the EV battery assembly line is planned to commence in 2025. Approximately A$24 million in US government performance-based grants and tax incentives have been secured to build the facility.

Detroit is home to a skilled workforce that is familiar with high volume production for the automotive industry, existing EV and green energy supply chains, and supportive state and local governments. The city is again becoming an automotive manufacturing hub but this time centred around advanced green clean energy technology that is attracting global manufacturers like German fast charger manufacturer EcoG.

Fortescue Green Energy Strategy

Fortescue Metals is on a clear pathway to become a global integrated green technology and metals business by building next generation green manufacturing plants to decarbonise business and heavy industry. This aggressive push into green markets comes at a time when Fortescue’s core iron ore business is performing strongly in terms of shipments and price realisation. Demand for Fortescue’s low grade and relatively cheaper iron ore is buoyed by Chinese steel mills focused on conserving costs and maintaining margins.

The Group recently launched a green energy funding platform known as Fortescue Capital aimed at attracting investment funds to assist with financing the green energy projects underway and planned in the US and Australia. Fortescue Capital is based in New York and funds may be applied to investments like the US$550 million green hydrogen project in Arizona or the green ammonia project in Norway which has already attracted EUR204 million in European Union funding.

Fortescue’s cash balance of US$4.7 billion at 31 December 2023, which is up from US$3.1 billion at 30 September 2023 leaves the Group well positioned to finance its green energy ambitions.