The Fortescue Metals Group Ltd (ASX: FMG) share price is in focus after the ASX resources share announced it has taken a “lead investor role” in a hydrogen business.
Fortescue is best known for iron ore mining, but it’s also aiming to be one of the world’s major (green) hydrogen players.
Fortescue Metals Group Ltd (ASX: FMG) share price
Fortescue’s Electric Hydrogen investment
The company said that it took the lead investor role in Electric Hydrogen’s US$380 million series C funding round. According to reporting by the Australian Financial Review, this investment was worth around US$100 million.
In addition to the investment, Fortescue and Electric Hydrogen have signed a “framework procurement agreement” to supply 1GW of Electric Hydrogen’s electrolyser systems to Fortescue’s green hydrogen projects in the US and globally.
Fortescue said that Electric Hydrogen’s complete 100MW electrolyser system produces green hydrogen from renewable electricity and water at large scale.
Each of these electrolyser systems can make nearly 50 tons of green hydrogen per day at a “transformational low cost”.
Management commentary
Fortescue Energy CEO, Mark Hutchinson said:
Fortescue is committed and focused on supporting the rapid scaling of green technology to help heavy industry decarbonize and producing green hydrogen at scale is integral to that. Right now there are not enough electrolysers in the world to support the amount of green hydrogen we are set to produce. That is why we are partnering with other world leaders in this space to secure our green energy supply chain, and we’re excited to invest and secure capacity with Electric Hydrogen to help us achieve our goals.
Electric Hydrogen, just like Fortescue, is working at the speed and scale necessary to help deliver green hydrogen projects around the world and stop the need for fossil fuels. We are looking forward to working together.
The Electric Hydrogen CEO and co-founder Raffi Garabedian said:
Electric Hydrogen and Fortescue share an ambition to achieve large scale, low-cost production of green hydrogen globally as soon as possible. We want to make fossil-free hydrogen an economic inevitability for fertilizer producers, steelmakers, chemical companies and other critical industries that have no other option to decarbonise.
Final thoughts on the Fortescue share price
It’s interesting that Fortescue has made this move. I believe that it shows Fortescue has a modest frame of mind for the company to recognise that another business may have the best electrolyser system.
I wouldn’t call the Fortescue share price great value today considering the iron ore price has strengthened in recent times – I’d prefer to invest when there’s more fear surrounding China and iron. But, I continue to be a shareholder thanks to its green energy efforts and the large dividends.