The Fortescue Ltd (ASX: FMG) share price is in focus after the company announced decarbonisation deals.
Fortescue is a large iron ore mining business, with a segment focused on green energy. The company has a multi-year goal of decarbonising its operations.
Decarbonisation
The company announced these deals in New York, during the UN General Assembly.
It aims to electrify its Pilbara operations and deliver on its target of ‘real zero’ by 2030 and also “catalyse decarbonisation globally”.
Fortescue has signed agreements with some of the world’s most advanced green energy innovators including electric vehicle and battery business BYD, solar technology and manufacturing giant LONGi, construction and mining equipment manufacturer XCMG and energy storage leader Envision Energy.
The company also announced it has finalised the acquisition of Spanish renewable technology company Nabrawind.
What has been agreed
Fortescue is partnering with these businesses to deliver the world’s most efficient and cost-effective solutions to decarbonise energy grids.
BYD will supply energy storage solutions.
LONGi will supply its photovoltaic modules and solar technology.
Envision will supply advanced wind turbine and integrated energy solution technologies that combine diverse renewable sources and optimise power availability.
Some of the agreements relate to battery electric trucks – Fortescue wants to deliver the world’s first large-scale deployment of battery electric haul trucks.
XCMG is expected to supply up to half of Fortescue’s future fleet of between 300 to 400 zero-emission 240-tonne haul trucks, with phased deliveries planned from 2028 to 2030
Lieberr is expected to provide at (at a minimum) the other half of the haul truck fleet and electric excavators.
Fortescue Zero will continue to focus on developing and integrating advanced power systems for Fortescue’s fleet, including optimising battery electric truck performance in Pilbara conditions.
Acquisition
Fortescue also said it’s accelerating the deployment of renewable energy across its operations. It’s buying full ownership (up from a minority stake) of Spanish wind technology business Nabrawind and purchasing wind turbines from Envision Energy.
Nabrawind has an “innovative self-lifting tower design that allows turbines to be installed at greater heights, capturing stronger winds and generating more power.”
Envision’s turbines are engineering to perform in low-wind conditions and withstand extreme weather including cyclines. They will be integrated with Nabrawind’s 188-metre tower technology and provide improved generation and cost efficiency.
Final thoughts on the Fortescue share price
It’s a positive that the company is looking to decarbonise its operations. Hopefully the company has not spent too much on decarbonisation efforts within Fortescue Zero that it’s now buying from other companies.
At the current valuation, I don’t think Fortescue is an appealing buy because it’s not at a cyclical low (which is when I like to consider ASX mining shares). There are other ASX dividend shares I’d rather buy.
