Fortescue Metals head defends zero emissions target

Fortescue (ASX: FMG) defended its plans to reach real zero carbon emissions across its Australian iron ore operations by 2030.

“In the mining industry, we have been hammered for deployment of capital,” Fortescue Metals CEO Dino Otranto said Wednesday during a fireside chat at the AFR Mining Summit in Perth. “We’ve been named as wasting capital, so generally we become ultra conservative (…) So, there’s no way that somebody is going to risk what we’re doing at Fortescue.

“Now, we have a very different risk appetite, okay? And over the years, it’s proven to be the best value return for the shareholder.”

Recent advertising commissioned by BHP (ASX, NYSE, LSE: BHP) — which the interviewer at the conference reminded Otranto of — cites research showing the mining giant’s carbon emissions fell 36% over five years while Fortescue’s rose 24%.

While conceding the figures were accurate, Otranto attributed the increase to Fortescue’s energy-intensive Iron Bridge magnetite operation. Emissions across Fortescue’s hematite business have declined, he added.

“Our total portfolio will go down over the next couple of years as we bring on these trucks that don’t exist,” Otranto said in a pointed jab at BHP.

Deferred investments

On Monday, the Australian Broadcasting Corporation’s Four Corners program aired an investigation into BHP’s decarbonization efforts, claiming the company had deferred billions of dollars worth of green projects. BHP blamed the delays on insufficient technology, a position Fortescue disputed during the program.

BHP Western Australia Iron Ore asset president Tim Day told the conference on Wednesday that battery-electric haul trucks were “not quite ready yet.”

In April, Fortescue launched a national advertising campaign calling for reform of the Australian government’s diesel tax “handout”.

Australian miners are major beneficiaries of the Fuel Tax Credit Act 2006, which refunds diesel excise to off-road fuel users.

Otranto defended the campaign, saying it cost only “a couple hundred thousand dollars.”

“The size of the campaign, in terms of relative media campaigns and support for media outlets, it’s kind of a drop in the ocean,” he said.

“To be honest, running a few TV ads — it’s been blown up as this major propaganda campaign.

“What are we actually advocating for? I know that I’m bucking the trend, and I’m standing out from the crowd, but we firmly believe that the current disincentives to align with both state and federal government to go green is absolutely not good enough.”

Isolated

Fortescue remains isolated in its position, with miners including BHP and industry lobby groups campaigning against changes to the legislation.

Otranto took particular issue with Chamber of Minerals and Energy (CME) of Western Australia CEO Aaron Morey describing any change to the diesel rebate as “really bad tax policy”.

He said the comments left him “a bit hot under the collar” and prompted him to write a letter to the CME, of which Fortescue is a member.

“The peak industrial body here in WA, I don’t think adequately consulted, irrespective of the outcome of a position,” Otranto said.

“There was no consultation on that. Period. And I thought it was, to be honest, the weirdest thing I’ve ever seen in my life.”

Federal Resources Minister Madeleine King also weighed in, telling ABC Radio the government was not considering changes to the diesel rebate.

“What I find concerning is how we have companies wanting to use government policy to create an advantage over their competitors,” she said.

“Now, I think competition is a really good thing in any market and the same goes for iron ore, but to see campaigns waged throughout the media is, I think, a bit off when companies should perhaps look in their own backyard and monitor their own behaviour.”