According to reporting by the Australian Financial Review, Fortescue Metals Group Limited (ASX: FMG) is close to securing a $100 billion project in Africa.
What is this African project?
Fortescue Chair Andrew Forrest has reportedly secured the “inside running” to develop the world’s largest hydro power project, which alone is worth $103.8 billion, as well as associated port, green hydrogen and green ammonia capability in the Democratic Republic of Congo.
The AFR also reported that Dr Forrest said its green energy and green hydrogen projects in Africa were not confined to the DRC and included projects in Kenya and Ethiopia, with investors and financiers already indicating a willingness to commit more than US$100 billion.
This Grand Inga dam project is part of a plan to diversify Fortescue away from iron ore and make it into a global force in the green energy and green hydrogen space.
The AFR stated that under their agreement, which is dependent on final discussions, Fortescue subsidiary Fortescue Future Industries was granted exclusive rights to develop the long-talked about Grand Inga project, including the Matadi and the Pioka projects.
All foreign governments, as well as service and construction providers, will now deal with Fortescue about Grand Ingo.
Congo president Felix Tshisekedi has “put his faith” in Fortescue’s track record of delivering major infrastructure projects in mining.
Dr Forrest quotes
The AFR Dr Forrest said: “We have a number of parties highly interested in supporting our projects and Fortescue will invest on behalf of itself and its supporters over $US100 billion developing the top hydro, solar and geothermal sites in Africa.
“Fortescue will take each project through to bankable feasibility approval where there are an array of international investors and lenders willing to participate in the green energy revolution.”
He also said that the projects had the potential to generate more than 100 gigawatts of green electricity primarily for the production of green hydrogen in Africa for European markets. Dr Forrest said there is firm interest for at least that amount in Europe.
Summary thoughts on Fortescue and the share price
Fortescue is putting 10% of its annual profit each year towards Fortescue Future Industries. That’s where it’s going to be targeting global green projects to make money and turn the world greener.
It seems like that plan is already paying off with this huge African project, though I’m not sure how much revenue or profit Fortescue will make from this.
With the iron ore price soaring so high, I’m not sure if the Fortescue share price is a buy right now. It’d probably be better to wait for a lower price. But it’s one of the most forward-thinking businesses in the ASX 20 in my opinion.