Fortescue's Forrest Hones in on Renewable Energy, Aims to Go Green by 2030

Andrew Forrest, founder and executive chair of major mining company Fortescue (ASX:FMG,OTCQX:FSUMF), has been making headlines following his bold statements on renewable energy.

Toward the end of February, the mining tycoon was quoted as saying that Fortescue is quitting fossil fuels.

According to news outlets like TIME and CNBC, he said the company will stop burning fossil fuels across its Australian iron ore operations by the decade’s end, calling on other companies to do the same.

“It’s time for businesses to stop talking about long-term targets and completely ditch fossil fuels in the coming years rather than in the coming decades,” he states in a February 25 TIME article.

“If you think you can’t go green, then you’re right,” he says of his industry colleagues … It’s time for you to get off the stage and learn from someone with more talent, more conviction, or initiative than you who can lead your company.”

Fortescue’s vow to eliminate fossil fuels by 2030 and lower costs traces back to its US$6.2 billion investment in 2022, when it announced its plan for industry-leading decarbonisation. It said at the time that the investment was designed to eliminate its fossil fuel risk profile and enable it to supply customers with carbon-free products.

Notable big oil companies like BP (LSE:BP,NYSE:BP) and Shell (LSE:SHEL,NYSE:SHEL) have recently announced they will cut back on clean energy pledges, saying that they will focus more on oil and gas production.

BP said the decision is a strategic reset to reduce and reallocate capital expenditure to drive growth, pursue performance improvements and work on cost efficiency. Meanwhile, Shell CEO Wael Sawan explained that the company is providing the secure energy customers need at the present while working on its transformation to win in a low-carbon future.

Forrest believes big oil companies are getting it wrong, especially now that customers are in search of green energy.

“I’ve always found that the customer is always right, which is why we’re going renewable and moving away from oil and gas," he said on CNBC 's Squawk Box Europe on March 24.

"Our customers are saying, ‘We want energy, but not at any cost, and if you can give us green energy at the same price as dirty (energy) then we are going to buy green every day.’ That’s my job, and that’s Fortescue’s job."

He added, “Well, if (the) oil and gas (industry) doesn’t want to supply green energy, guess what, Fortescue will."

As the fourth largest iron ore producer in the world, Fortescue’s push to reduce fossil fuel dependency and emissions is a significant step toward sustainable mining practices.

Its US$6.2 billion investment to eliminate fossil fuels is expected to displace around 700 million litres of diesel and 15 million gigajoules of gas per year — reducing emissions by 3 million tonnes of carbon dioxide annually.

The company is also working toward its green fleet, developing battery-electric haul trucks and exploring hydrogen- and ammonia-powered mining equipment to eliminate diesel consumption.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.