The Fortescue Metals Group Limited (ASX: FMG) share price is up again as it revealed the latest progress at Fortescue Future Industries (FFI).
For people that haven’t heard, Fortescue Future Industries is the division that is pursuing a wide range of green hydrogen, renewable energy and green products projects across the world.
What has FFI done now?
Fortescue Future Industries said that it has purchased two new battery electric locomotives to transport its iron ore to port.
The new 8-axle trains will have an energy capacity of 14.5 megawatt hours and will be built in Brazil by a Caterpillar company.
This purchase is an important part of Fortescue’s goal to decarbonise that various vehicles and machinery that the ASX miner utilises. It is aiming to achieve carbon neutrality for scope 1 and 2 emissions by 2030, as it transitions from a pure play iron ore producer to a green renewables and resources company.
Fortescue is expecting the delivery of the first locomotive in 2023.
I think that FFI is going to be increasingly important to the Fortescue share price as the years go on.
Management comments
Fortescue Chief Executive Officer, Elizabeth Gaines said:
“The new locomotives will cut our emissions while also reducing our fuel costs and our overall operational expense through lower maintenance spend.
“The acquisition builds on the work being carried out by Fortescue Future Industries’ Green Team in Hazelmere to deliver locomotives operating solely on green ammonia and other green renewable fuels and technologies.”
The CEO of Progress Rail, which is the business Fortescue is purchasing from, said it’s working with the Fortescue team to determine the application, feasibility, and suitability of battery electric technology for deployment on their railway.
Fortescue Future Industries also reminded the market that it has made progress in its mission to transform the trucks, ships and other mobile equipment to operate on zero pollution fuels as soon as possible.
My thoughts on the Fortescue share price and this news
I think it’s interesting that Fortescue noted that the fuel cost and overall operational expense will be decreased with lower maintenance spending. Higher margins is attractive, on top of the green nature of it.
The Fortescue share price is still down by around 15% over the past six months. However, it has recovered a lot of lost ground over the past couple of months.
I’m not sure if it’s an obvious buy today after a strong run, it depends what the iron ore price does. But, FFI’s growth potential seems very compelling.
