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Fortescue buys unit of F1’s Williams as iron ore mining decarbonization speeds up

25 January 2022 Keiron Greenhalgh

Mining giant turned energy transition advocate Fortescue Metals Group is to buy UK-based Williams Advanced Engineering (WAE) for £164 million ($221.7 million) in the latest leg of the Australian iron ore mining industry's journey to decarbonization, especially when it comes to transportation emissions.

WAE, an offshoot of the Williams F1 racing team, specializes in high performance battery systems and electrification and Fortescue wants to put it to work transforming Fortescue's 3-km long freight trains, 400 metric ton (mt) mining trucks, and industrial equipment.

First on the slate will be developing a battery electric train concept, which the miner and its energy transition-focused Fortescue Future Industries (FFI) unit are promising further details on early in 2022.

Fortescue's deal is the latest in a series of announcements so far this month by Australian mining giants, especially those active in the iron ore sector.

BHP said 17 January it would purchase four battery-electric locomotives for its Western Australian iron ore operations. The locomotives are scheduled for delivery in late 2023. A full transition to battery-electric locomotives would reduce BHP's Western Australia iron ore diesel-related carbon emissions by about 30% annually, the company said. BHP has deals in place with Caterpillar and Komatsu to develop zero-emissions trucks for the enormous mines the company, and its rivals, operate.

Rio Tinto on 11 January said it had agreed to purchase four battery-electric trains for use in the iron ore-rich Pilbara region of Western Australia as part of plans to cut its carbon emissions by 50% by 2030. Rio Tinto purchased the four locomotives from US-based Wabtec. Production is due to commence in the US in 2023 ahead of initial trials in the Pilbara in early 2024. The company also said a full transition to net-zero emissions technology would reduce its carbon emissions in the Pilbara by around 30% annually.

Fortescue's two rivals were among a group of 28 mining companies, including some of the sector's biggest firms, who committed to net-zero Scope 1 and 2 GHG emissions by 2050 or sooner on 5 October.

Transportation sector-wide shift

The announcements are part of a yet wider decarbonization of Australian heavy industry and transportation, including railroads. The Australasian Railway Association (ARA) and two partners are working on a roadmap for the federal and state authorities plus industry to adopt to accelerate decarbonization in the transport sector.

Meanwhile, the Australian mining sector, led by the Minerals Council of Australia (MCA), has committed to achieving net-zero emissions by 2050 in support of the goals of the Paris Agreement, the trade group said in October.

This all comes against the backdrop of an Australian government that finally joined almost all of its industrialized nation peers by committing to net-zero emissions by 2050. Prime Minister Scott Morrison's commitment in October in the "Long Term Emissions Reduction Plan" relies on cutting the cost of low-emissions technologies, deploying such technology at scale, and working with other countries on such technologies.

But that won't be enough, say industry observers. The Clean Energy Council said the announcement does little more than echo the commitments and action already underway by state governments, businesses, and households. A stronger 2030 target is needed to provide clarity and positive investment signals to accelerate the decarbonization of Australia, it added.

And the opposition Labor Party upped the ante in December. It unveiled a plan it said will reduce Australia's emissions by 43% by 2030 and spur $76 billion of investment. The plan was released ahead of federal elections later in 2022.

Among the components of the plan are:

  • Reducing the Australian Public Service's emissions to net zero by 2030;
  • Allocating up to $3 billion from a National Reconstruction Fund to invest in green metals, clean energy component manufacturing, hydrogen electrolyzers, and fuel switching;
  • Protecting the competitiveness of Emissions Intensive Trade Exposed industries (such as mining and steel) by ensuring they will not face a greater constraint than their international rivals; and
  • Providing direct financial support for energy efficiency measures in existing industries and developing new industries in regional Australia (such as the Pilbara).

The initiative won business community backing. "Labor's sensible and workable plan to meet Australia's net zero emissions commitment is a welcome step towards meeting this challenge," Business Council of Australia Chief Executive Jennifer Westacott said in a statement.

"Race of our lifetimes"

Fortescue Metals Group Founder Andrew Forrest also agrees with Labor. "This is the race of our lifetimes-the race to save the planet from cooking. The speed at which we move matters," he said in announcing the WAE deal.

The deal, said Forrest, is the key to unlocking the formula for removing fossil fuel-powered machinery and replacing it with zero-carbon emission technology, powered by green electricity, green hydrogen, and green ammonia. FFI tweeted that the deal went through "because we're in a race to save the planet, and every second counts."

Fortescue Metals Group has been working with WAE since early 2021, the company said, with WAE designing and building a battery system to power an electric mining haul truck.

The WAE deal wasn't Fortescue Metals Group's first step towards decarbonization of its rail operations this month though. The company on 6 January said it had bought two battery electric locomotives to transport its iron ore to port and expected to take delivery in 2023.

Shipping on the slate too

Forrest, one of Australia's richest people, also has his eyes set decarbonizing maritime transportation as the company seeks to eradicate emissions across its value chain. In October, the Perth-based company said it plans to achieve net-zero Scope 3 emissions by 2040, the first mining major to make a firm commitment to tackling the largest part of the industry's carbon footprint.

Fortescue Metals Group wants to halve the emissions intensity of transporting its ore by 2030. In March 2021, Fortescue Metals Group announced a target of operational carbon neutrality by 2030, 10 years earlier than its previous goal, set in June 2020. A large part of those plans involves hydrogen, which are intertwined with the company's targets in the maritime transportation sector.

FFI is tasked with producing 15 million mt of hydrogen from renewable power annually by 2030. The company plans to build a 2-GW-per-year electrolyzer factory in Gladstone, Queensland by the end of this year, with an initial investment of A$114 million ($85.9 million). Separately, FFI is set to make the final investment decision on a 250-MW green hydrogen plant in Bell Bay, Tasmania by the end of this year.

When it comes to FFI's planned hydrogen production, Forrest said in October some will be converted to green ammonia to fuel marine engines currently under development. "We are not yet at 100%, but around 60%, 70%, or 80% [technically]," he told the Global Maritime Forum.

Fortescue Metals Group announced a partnership with K-Line, JERA, Vale, Trafigura, and another 18 companies for a study on using ammonia as marine fuel in June 2021.

Forrest said in October the company's fleet of eight very large ore carriers will be converted to be powered by ammonia. The company estimates that 300,000 mt of hydrogen will needed to be converted to ammonia to power the vessels every year.

The company is also building its own electrolyzers to do so, announcing in late December that an in-house design produced industrial grade hydrogen for the first time that week. FFI has developed a number of new electrolyzer technologies that will form part of an "electrolyzer patent family," it said. The outcomes of these projects will inform FFI's electrolyzer technology selection going forward, as it works towards the 15 million mt/year by 2030 target.

Posted 25 January 2022 by Keiron Greenhalgh, Senior Editor

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