The Fortescue Metals Group Ltd (ASX: FMG) share price is up after it announced that it’s acquiring a 100% interest in a US green hydrogen hub.
While Fortescue is best known as an iron ore miner, it’s looking to become a sizeable producer of green hydrogen (and green ammonia).
Fortescue’s new green hydrogen push
Fortescue Future Industries (FFI) has made its first major move in the US after the passage of the Inflation Reduction Act. It has invested US$24 million to buy 100% of Phoenix Hydrogen Hub (PPH).
PHH is developing a proposed green hydrogen project near Phoenix, in the city of Buckeye, Arizona.
Phase one of the PHH project is planned to be an 80MW electrolyser and liquefaction facility, which will be capable of producing up to 12,000 tonnes of liquified green hydrogen each year. This would be able to displace the equivalent of 10 million gallons of diesel consumption annually.
One of the positives of this project is that it has the capacity to “scale up” production to help meet future demand. It will play its part in supporting the Fortescue share price in the future when it’s operational.
Management commentary
The FFI CEO Mark Hutchinson said:
FFI is actively expanding its U.S. presence and strengthening its position as a leading global developer of green energy production and technology.
We are committed to helping turn North America into a world-leading global green energy producer.
This is an exciting opportunity to work towards a fast-moving project that will lead the way in the U.S., creating new green industrial jobs for Americans, while also helping to reduce emissions once production begins. The U.S. is now one of the best places in the world to do this, with the Inflation Reduction Act making it an ideal place to invest in green energy.
Nikola, whose trucks are manufactured in Arizona, will be a potential customer of liquefied green hydrogen from PHH. Those trucks will be zero-emission hydrogen fuel cell electric vehicles and hydrogen refuelling stations in California and the US Southwest.
Final thoughts on the Fortescue share price
The company is doing a lot of good things with its green division. The building blocks are there for it to play a significant role in the energy transition. If green hydrogen becomes a major fuel source for transportation of heavy vehicles then FFI could turn out to be an excellent investment by the company.
However, at a Fortescue share price of around $22.50, it doesn’t seem like great buying today, but the long-term looks promising, particularly with the USA decarbonisation push.
