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With a market cap of $54 billion, Fortescue Metals Group Limited (ASX: FMG) is one of ASX’s largest companies. But can investors buy Fortescue Future Industries (FFI) shares?
Fortescue is best known for being a big ASX mining share with a focus on iron ore, along with its heavyweight peers Rio Tinto Limited (ASX:RIO) and BHP Group Ltd. (ASX:BHP).
But Fortescue’s business segment known as Fortescue Future Industries is attracting a lot of interest.
FFI describes itself as a “global green energy company committed to the production of green, zero-carbon hydrogen from 100% renewable sources”. Green hydrogen, when used, mainly produces water.
FFI is focused on “leading the green industrial revolution, developing technology solutions for hard-to-decarbonize industries, while building a global portfolio of renewable energy, green hydrogen and green ammonia projects.”
One of its main goals is to help decarbonize Fortescue’s operations by 2030.
Can you buy shares of Fortescue Future Industries?
FFI is not a separately listed company on the Australian Stock Exchange. Investors cannot therefore buy FFI shares directly.
But investors can buy shares of ASX-listed Fortescue, which owns 100% of Fortescue Future Industries.
Some experts estimate that FFI is already worth tens of billions of dollars. According to the report of Australian Financial Review, Fortescue Chairman Andrew Forrest was approached by investment banks. They suggested that Fortescue Future Industries was already worth US$20 billion if it were to go through the initial public offering (IPO) process.
So if investors applied that to Fortescue’s overall market capitalization, it would represent a significant portion of the company’s value. It also depends on how much value investors would place on Fortescue’s steel business.
What are FFI’s long-term goals?
Certainly, Forrest has big goals for Fortescue Future Industries. He said the following in Fortescue’s FY22 result:
We must become the Saudi Arabia, not of oil, but of green hydrogen, we can also become the Asia of green iron, if we are ready to commit to it. Think of the Northwest Shelf – not climate-threatening methane, but carbon-free green ammonia, for every ship in the world. Please don’t think it can’t be done, it is possible.
The company is investing to create a global portfolio of green energy projects to deliver 15 million tonnes per year of renewable green hydrogen by 2030.
FFI has already signed agreements with companies in the northern hemisphere for the supply of green hydrogen.
In October 2021, it signed a memorandum of understanding (MoU) with British construction company JCB and Ryze Hydrogen for the purchase of 10% of FFI’s global green hydrogen production.
It has also signed a memorandum of understanding with the German electricity company E.ON supply up to five million tonnes per year of green hydrogen by 2030. This agreement alone represents approximately one-third of Fortescue Future Industries’ future production through 2030.
Fortescue has also made a few acquisitions and partnerships to boost FFI’s decarbonization and earnings outlook. For example, it acquired Williams Advanced Engineering, a leading provider of high-performance battery and electrification technology.