There were plenty of questions asked about the veracity of mining’s “ambitious” 2030 decarbonisation targets on the opening day of the major Austmine 2023 conference in Adelaide. Fortescue Metals Group’s Christiaan Heyning repeated arguably the most aggressive goals of a mining major and didn’t hesitate to up the ante: “We really welcome you to race us.”
Fortescue’s head of decarbonisation, who joined the Australian iron ore producer last year after nearly 20 years at McKinsey, said the company’s US$6.2 billion plan to reach “real zero” terrestrial emissions (scope 1 and 2) across its iron operations by 2030 was clearly a tall order.
The investment includes spend on 2-3GW of renewable energy generation, distribution infrastructure, and battery storage, as well as hydrogen and battery powered primary and ancillary mobile mining fleet.
“This is now the major talking point that we talk about with our investor base,” Heyning said at the conference.
“So this is becoming a really big expectation that we are now working extremely hard to solve.”
Nor was the budget as expansive as it looked on paper.
“We’re going to do this for a very tight budget,” Heyning said.
“Trust me, the budget is really tight.
“We’re going to do it without using any offsets … This is a physical challenge. We’re not going to wiggle our way out of it through concessions and offsets.”
The Andrew Forrest-backed and chaired company remained determined to be a leader rather than a follower in its quest, including now its bid to commercialise new, required technology, and to build necessary, complementary operating know-how and skills in its workforce. Why?
Not just because the company had loudly and frequently proclaimed its commitment – even to the secretary general of the United Nations – to eliminate fossil fuels from its mining and infrastructure footprint.
“We make a little noise and at times you will say, we make too much noise,” Heyning said.
“I’d rather make too much noise than too little noise.
“But we do spend quite a bit of time with investors and they say, yeah … environment, cool, my kids love it, but tell me about the money. Why are you doing this?
“First of all, we believe it’s really good business.
“Diesel prices we think are going to go higher. It’s a very certain bet that CO2 prices will go higher than the current levels. So the cost of fossil fuel is huge and increasing.
“Secondly, the physical availability of fossil fuels is not going to get any easier. Australia is getting rid of all its refineries. There is a lot of tension going on, of course, geopolitically. So there’s also just a physical availability risk.
“And then another thing I think we can all agree on is regulation is going to increase in terms of sustainability. Whether it is in Australia or whether this is in the countries that we sell our materials to, wherever you go, regulation on CO2 is going to get heavier and heavier. And by decarbonising … we seriously reduce the risk that we have in terms of being exposed to the regulations.
“So we are very optimistic that this is not just something good for the planet, it’s not just something that appeals to our people, it’s also something that’s going to be quite sound.”
Heyning said he disagreed with an earlier assertion that “green” metals and other commodities wouldn’t fetch premium prices in the market.
“We actually do see that,” he said.
“We do see a sizable segment that is very keen to decarbonise and to pay a premium for that.
“Not necessarily to perpetuity … but people understand you need the flywheel going. So when we, for example, look at our iron ore, or green ammonia, or green hydrogen, there is a big enough segment that is willing to pay a premium, at least in a transition period, in order to get going.”
Heyning said the race to develop critical heavy electric mining and transport systems, and infrastructure, involving alliances with Williams Advanced Engineering (WAE), Liebherr and others, was hitting development milestones to underpin deployment in 2025 and 2026.
“Let me stress that we just don’t do that [commercialise new equipment] for Fortescue. We aim to make this available for everybody else as well,” he said.
“So if any of you want an electric piece of mining equipment, give me a ring.
“We do need to do this together. We need the technology. We need the trucks, the chargers, the network … all that kind of stuff.
“We need the minerals that go into this.
“We fully recognise we cannot do it all alone. And even if you could, just Fortescue is not going to change the trajectory of emissions in Australia, let alone the planet.
“As a mining sector we need to do it all together.
“So let’s do this and continue the exchange of technology and information as we’re already doing [here].
“I’m very happy to talk to anyone of you who wants to help push the frontier of what we can do together.”