Fortescue takes final investment decision on first two hydrogen production projects worth a combined $700m

Fortescue has taken a final investment decision (FID) on its first two hydrogen projects: Phoenix Hydrogen Hub in the US and a 50MW electrolyser project in Gladstone.

The Australian mining and energy company has also approved a small green iron project in Pilbara that will use an existing supply of renewable hydrogen.

This includes the $24m Fortescue spent to buy the project at an early stage, along with yet-undeveloped land, this summer from US zero-emissions truck company Nikola, which was in the midst of streamlining its business to focus solely on getting its vehicles to market.

Despite the name, the Phoenix Hydrogen Hub is not a part of the Regional Clean Hydrogen Hubs programme.

The Australian company disclosed that the project — which is due to start up mid-2026 — has already procured 80MW of alkaline electrolyser capacity, although a supplier has not yet been named.

The facility will also procure power via the Arizona Public Service, supplied “from new sources of wind and solar generation under its regulated extra high load factor tariff, together with green attributes under its Green Power Partners program”, with a 69kV connection to the grid currently underway.

“The Phoenix Hydrogen Hub establishes Fortescue in one of the most attractive energy markets in the world, facilitated by the Inflation Reduction Act,” said the company’s energy CEO Mark Hutchinson, referring to generous incentives for clean hydrogen, such as an up-to-$3/kg production tax credit, signed into law last year.

However, guidance for actually claiming the federal tax credit is unlikely to be published before the end of the year, although many expect similar rules on additionality (ie requiring new sources of renewable power) to access the top rate as have been legislated in Europe.

“The proximity to California, a primary heavy haulage trucking route and the most progressive US state to adopt and incentivise clean hydrogen, primes Fortescue well to deliver value into the US domestic market,” Hutchinson said.

Meanwhile, Fortescue will also spend $150m on a two-stage 50MW proton exchange membrane (PEM) electrolyser project in Gladstone — for which it will make the equipment in-house at its 2GW factory, which the plant will be co-located with.

The first stage will see 30MW of capacity installed, to start up in mid-2025, with the next 20MW commissioned by 2028. This is because although the Gladstone Area Water Board has committed enough water to support the first phase, extra infrastructure upgrades would be needed to supply sufficient volumes for the second.

Like the Phoenix Hydrogen Hub, this facility will use renewable electricity bought off the grid. “It is anticipated that power will initially be purchased from the spot market, and flexible operations will be employed to manage pricing,” Fortescue noted in its announcement.

The Australian firm has also not disclosed whether any long-term offtake agreements for either project have already been signed.

Meanwhile, although it is progressing its second Australian project in Gibson Island through front-end engineering design, the mining and energy company admits that the facility faces “structurally high green electricity costs” at present.

The Fortescue board has also approved $50m on a green iron project near its Christmas Creek mine in the Pilbara region of Western Australia, which will process magnetite and hematite ores using hydrogen and renewable electricity.