Renewable energy is likely to eventually overtake Fortescue Metals Group’s iron ore business, despite strong tailwinds for the commodity ahead, the company’s former chief executive officer Elizabeth Gaines said at Davos.
Fortescue would continue growing its iron ore business, but the scale of the world’s green energy transition would boost demand for renewable energy far more, said Gaines, non-executive director and global green ambassador at Fortescue, on the sidelines of World Economic Forum’s annual meeting in Davos.
There’s no lack of ambition for growth in our iron ore business. But when you look at the scale of the green energy transition, it’s not unreasonable to think that ultimately renewable energy will probably outscale our iron ore business significantly,” she told the Reuters Global Markets Forum.
“I think we will see renewable energy play a very big part of our overall earnings in the future.”
Last year, the Perth-based miner said it would spend $6.2 billion to eliminate the use of fossil fuels and achieve “real zero terrestrial emissions” across its iron ore operations by the end of the decade.
“There’s a view that businesses are doing this just for ESG reasons, but it’s also a smart thing to do, because the economics absolutely stack up,” Gaines said.
The world’s fourth-largest iron ore producer has several projects lined up as it looks to rapidly develop technology to produce green hydrogen, transitioning from a pure-play iron ore producer to a green energy firm.
The miner’s Australian renewable energy projects were “very close” to a final investment decision, Gaines said, adding that one of the domestic projects would likely be the first to gain approval from the board.
(By Divya Chowdhury and Anisha Sircar; Editing by Alex Richardson)