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FMG - Fortescue Ltd

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Sean K said:
Agree, this is a long transition. I only posted that as I find it a touch ironic that Twiggy owns a company with low ESG credentials.
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Twiggy is smart.

Beads in Rome.

Bum in Canterbury.

Mat in Riyadh.

gg
 
Sean K said:
Agree, this is a long transition. I only posted that as I find it a touch ironic that Twiggy owns a company with low ESG credentials.
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Andrew’s titled his Boyer lecture speech last year “confessions of a carbon emitter” so he is definitely not trying to hide Fortescues current impact.

It’s just a fact of life that with current technology, moving 180 million tonnes of Iron around the planet uses a lot of energy, and that energy releases carbon.

But, it’s something that he is wanting to change, and has taken responsibility for more than most.

 
Another innovative Hydrogen purchase by FFI.


FMG has taken a stake in innovative hydrogen producer Starc.

Fortescue (ASX:FMG) Future Industries to buy stake in Sparc Hydrogen​







Full Screen


Key points​

  • Fortescue Future Industries is buying into a joint venture project to develop green hydrogen
  • If successful, this method of making hydrogen wouldn’t need renewable energy or electrolysers
  • The Fortescue share price is up around 3% in morning trading

The Fortescue Metals Group Limited (ASX: FMG) share price is up this morning. Fortescue Future Industries (FFI) is going to buy a stake in Sparc Hydrogen alongside Sparc Technologies Ltd (ASX: SPN) and the University of Adelaide.

Green hydrogen joint venture​


Sparc announced to the ASX today that binding agreements have been executed between Sparc Technologies, Future Fortescue Industries and the University of Adelaide, forming the Sparc Hydrogen Joint Venture.

FFI will subscribe for shares in Sparc Hydrogen under a subscription agreement. Sparc Technologies intends to issue and complete the share issue imminently.

A shareholders agreement has been executed and includes provisions for things like governance and funding provisions.

FFI is going to pay $1.8 million to earn a 20% stake after the stage 1 funding close. It will pay an additional $1.475 million to buy an additional 16% stake. That will leave it with ownership of 36% of the joint venture. Sparc will also end up with 36% after the two stages, whilst the University of Adelaide will own 28%.

What is the green hydrogen project?​


As reported by my colleague Brooke Cooper this week, the Sparc Hydrogen joint venture is aiming to create “ultra-green” hydrogen by utilising solar power.

It will seek to further develop a process known as thermo-photocatalysis which will turn water into hydrogen and oxygen.

Adopting this process to produce green hydrogen means that renewable energy from wind farms and/or solar panels and electrolysers are not needed. Due to that, capital and operating expenditure is expected to be significantly lower than electrolysis and other forms of hydrogen production currently in use. Fortescue Future Industries is currently working on projects involving renewable energy and electrolysers.

This thermo-photocatalysis technology can potentially be adopted remotely and for onsite use, therefore reducing the reliance on long distance hydrogen transportation and/or electricity transmission.

Stage one of the project, in the first 2.5 years, will include steps like optimising thermo-photocatalytic reactor conditions, constructing a new reactor for full solar simulation, testing it (including the longevity and durability) and designed a prototype scale reactor for on-sun operation.

Stage two, over the following two years, will involve the installation and commissioning of the prototype reactor. It will also include the pre-commercial pilot scale system design, procurement, installation, commissioning and operation of a thermo-photocatalytic reactor.

Comments from management​


The Fortescue Future Industries CEO Julie Shuttleworth said:


​

 
I believe the main driver of the FMG price is the Iron Ore price.

Now Twiggy may be correct about Hydrogen, but many of the Engineering drinkers at the pub and In particular all of the Energy Committee feel that Hydrogen is not a goer.

Now I just go with Twiggy but I have my eye firmly on the road ahead and not on all the hoo ha around alternative energies in the bushes.

I'll stay with the concept of FFI, but just ask yourself what would be the price of a stock such as FMG, without Iron Ore?

gg
 
But @Garpal Gumnut how much money has also been made, on selling the dream and we are at the very early stages of the h2 road.
When PC's came out in the late 70's, a lot of people said what a waste of money, since then how much money has been made on the back of computer based tech?
The H2 wave hasnt even formed yet, maybe twiggy is paddling out to wait for the wave and maybe he will bail out when he has riden it for a while, who knows? It is a gamble IMO but with their spare cash, I think the odds are pretty good, as long as they are selective and dont buy companies that are based on tarot teadings and crystal gazing.
Just my thoughts.
 
Hydrogen will be a niche industry for a long time.

basilio said:
Adopting this process to produce green hydrogen means that renewable energy from wind farms and/or solar panels and electrolysers are not needed.
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Now why would that be important, eh?
Just for one minute give it a thought.

Energy is produced from one source (wind) and another (solar), which are both Variable sources of power, then turned into potential energy by a battery farm to feed an electrolyzer (I'm assuming it would need to operate constantly) and then the output would be your blessed green hydrogen power.
People are trying to bend the laws of physics to align with their ideals with no forethought for conversion efficiency factors or variable electricity procurement costs (among a host of others i have forgotten to mention).
 

Without iron ore FMG wouldn't exist - clearly. It has vast multi billion dollar mining business with no effective debt that is returning anything between 5 and 20 Billion a year in profits.

Renewable energy development and Green Hydrogen reflect a few things
1) Twiggy recognises with absolute certainty that CC is real and must be addressed post haste if any business is going to actually survive in the medium term future. It is that big an issue

2) His response is to marry FMG self interest in energy reduction with a determination to reshape all mining companies to totally clean renewable energy to make the maximum impact on CC . On the way he wants to make a big buck for FMG as the supplier of that technology and energy. IMV I can't see the renewable energy side making the returns currently offered by the iron ore segment but it should still be considerable.

3) He recognises that China's interests lay in reducing their dependence on current iron ore suppliers and thus are looking for alternative iron ore investments that they can control. In that context developing alternative profit making centres makes sound business sense.
 
@bk1 firstly, I don't disagree with your thoughts, because what you are stating is acurate.
But the problem as you say is renewables are variable, the issue that brings up is storage, to store the energy so that it can be used at a later date.
Right storage has its own problems, if you want to use that stored energy in medium that can be transported, then the issue becomes more complex, batteries would need to be huge to carry enough energy to make transporting it worthwhile. Obviously pumped hydro cant be transported, other than by being connectdd to the grid.
So what is required is something that can be produced by renewable energy, that is compact and can be transported and has the highest possible energy density by volume.
So hydrogen even though inefficient to produce, ticks the other two boxes, so a lot of money will be spent trying to get the first box ticked.
 
I'm not too sure about that. @sptrawler .But agree it would be good if Twiggy got it up.

Like you I thought H might be a goer despite many experienced Engineer friends poopooing the idea saying it had been tried in the past and that the only way to make it profitable was not a green one.

Now I'm a simple fellow and not an engineer so I go on Mr. Market who says at least on the NYSE/NASDAQ that it is not a goer. I traded some of them and made a bit and lost a bit, but the H market is not one I'd be rushing in to atm.

As to PC's and other technology you may be discussing survivor bias, i.e. looking at the concepts that were ridiculed that have gone on to make billions. For every AAPL there would be ten thousand failures, if not more.

I would like to see a Green solution to energy but oil, gas and coal have a way to go before they are superceded imo.

I hold FMG because of Twiggy and Fe Ore, and sure I'd like to see H get up, but my mates say I'm a Galah for thinking like that. And we don't want two galahs on ASF. @IFocus .

gg
 
@Garpal Gumnut dont get me wrong, Im electrical background, so I do know the issues and Im not jumping in at all, my exposure is only to HZR at about 20cents, so absolutely nothing. Im in no way banging the hydrogen drum, the whole renewable space, is in its infancy.

Im just stating the fact that to transport energy, from one part of the globe that has plenty of it, to another part of the globe that doesnt have it, requires converting it into something that can be transported that has the lowest cost, smallest volume and the highest energy density plus of course availability.
At the moment the front runner by a huge margin, given the above parameters is , nuclear, second is fossil fuel, third is hydrogen. IMO.
Once you narrow the criteria down to, the energy stored for transport, must be lroduced by renewable electricity, well that narrows it down somewhat, then there arent a lkt of options.
So it really isnt about how efficient it is, it is more about how serious is everybody about going green and stopping the use of fossil fuel and nuclear fuel, if they are really serious cost and the efficiency of the conversion to h2 doesnt come into it.

I think nuclear is the only viable option currently, but in 50 years who knows and as I said years ago, nuclear running flat chat complimenting renewables is the answer IMO.
when the renewables crank up with the sun and wind, have the nuclear producing hydrogen flat chat, when the renewables fade, the nuclear power station supllies the load and stops making hydrogen rinse,wash, repeat.
Whether twiggy has made his run too early, time will tell, but sooner or later H2 will be a major fuel source.
I personally think it is 30 years away.
I bought my first PC in 1981 for $1500, it was a waste of money, the internet wasnt even dreamt of, but 20 years later in 2001 wow.
 
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Thanks @sptrawler .

I've taken what you say on board. It makes sense.

gg
 

Twiggy is playing games to make headlines...

"FFI is going to pay $1.8 million to earn a 20% stake after the stage 1 funding close. It will pay an additional $1.475 million to buy an additional 16% stake. That will leave it with ownership of 36% of the joint venture. Sparc will also end up with 36% after the two stages, whilst the University of Adelaide will own 28%.

So Twiggy is shelling out $3.275 million for a 36% stake in this venture... He gets a feel good article and more government money...
 
Value Collector said:
I tend to think that where you are is less important than where you are heading.
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The trouble with analysts like that is they're basically telling you what the weather's like right now, something anyone could discover simply by going outside.

What they're not doing is providing a meaningful forecast of where the business is heading.
 

Exactly. $3.2M for FFi is barely spare change. But for that they have a 36% stake in the development and commercialisation of a hydrogen production process that would reduce the cost of green hydrogen many fold.

Twiggy would have sussed out the state of play of the technology and has decided that it is well worth a $3m punt. But more significantly he has the resources and drive that could make or break this process.

As for Sparc ? Frankly I think Twiggy will effectively over run the current management if this technology proves commercially effective. They will be dealing with him. Not vica versa.

 
basilio said:
Frankly I think Twiggy will effectively over run the current management if this technology proves commercially effective. They will be dealing with him.
Click to expand...

i would have thought the reverse , while it is achieving goals , FFI will sit and watch , if things get turbulent , well then ( FFI ) sleeves will be rolled up , after all Twiggy would have seen enough in this to make it worthwhile buying the assets from the administrators ( if the opportunity arose ) before the investment
 
Who knows? Frankly I don't believe Twiggy is going to finesse such a situation for the sake of a few million.

I believe investors should be clear about the nature of this buy in.

Traditionally, in fact in most cases of buyouts of promising new technology, the new owner does not want the process to succeed. In almost all cases the buyer has substantial investment in the current industry. Their financial interest lies in protecting their current investment from the threat of new more competitive technology. To cut a long story short most of these innovations are quietly killed or starved. At some later stage the technology may be used - when it suits the companies interest.

In fact there is small thriving industry around innovative people who develop a new beaut process/technology for an industry - and then swiftly sell out to their competitors. They are clear eyed enough to know they won't be allowed to successfully compete and that their payoff is the $10-20m they take to quietly disappear.

But this is not Twiggys aim. He is absolutely determined to make cheap green hydrogen a goer. His stakeholder interest is intended to drive commercialisation of this cheap new hydrogen production process and protect the company from other parties that would cheerfully strangle this at birth. And of course to be the final owner of the technology.

It will be an interesting ride.
 
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