Fortescue, one of the world’s largest iron ore producers and a leading player in green energy, has secured a $2 billion loan from Chinese banks to accelerate its decarbonization plans. The funding is part of the company’s broader goal to achieve net-zero emissions by 2030 for its Scope 1 and Scope 2 operations.
The loan marks one of the largest green financing deals between an Australian mining company and China. It comes when demand for low-carbon industrial production is rising. This growth is due to global climate goals and investor pressure for cleaner operations.
Fortescue will use the funds for several key projects, particularly renewable energy projects. They will replace diesel-powered equipment with electric options. Also, they will invest in green hydrogen production.
Where Will Fortescue Spend the $2 Billion?
Mining is one of the most carbon-intensive industries. Fortescue operates in the Pilbara region of Western Australia. Right now, they rely mostly on fossil fuels, especially diesel. This fuels their mining trucks, trains, and power generation.
However, the company plans to stop using fossil fuels by 2030. This bold goal needs a lot of investment.
The $2 billion loan will fund infrastructure upgrades. This includes renewable energy projects, electric transport fleets, and hydrogen systems. According to Fortescue, these measures could cut millions of tons of carbon dioxide equivalent (CO₂e) from its annual emissions.
Andrew Forrest AO remarked:
“This isn’t just a financial transaction. It’s a signal of what is possible when partners are aligned in ambition. As the United States steps back from investing in what will be the world’s greatest industry, China and Fortescue are advancing the green technology needed to lead the global green industrial revolution.”
China’s Role in the Green Mining Shift
China is Australia’s largest iron ore customer and also a rapidly expanding player in green finance. By working with Chinese banks, Fortescue strengthens both its financial position and its long-term commercial relationships.
For China, supporting Fortescue’s decarbonization aligns with its own push for greener supply chains. The world’s largest emitter is working towards its 2060 carbon neutrality goal. It is urging major suppliers to cut emissions, particularly in resource-heavy sectors.
This financing could open doors for Chinese investment in Fortescue’s green hydrogen projects. These projects aim to export clean energy to global markets, like China.
- SEE MORE: China’s First-Ever Sovereign Green Bond Hits Global Market: Will It Power Its Net Zero Ambitions?
From Ore to Zero: Fortescue’s Bold 2030 Pledge
In 2024, Fortescue reported the following GHG emissions profile:
- Scope 1 and 2 Emissions: 2.72 million tonnes CO2e (combined direct and purchased energy emissions for Fortescue’s operations).
- Scope 3 Emissions: 269.31 million tonnes CO2e, roughly 100 times greater than Scope 1 and 2 combined.
- Majority Source of Scope 3: The steelmaking process downstream accounts for about 97% of Scope 3 emissions (262.16 million tonnes CO2e).
This rise in emissions compared to the previous year (2.55 million tonnes CO₂e) can be due to operational scale and fuel consumption changes.
Scope 3 emissions, mainly from steelmaking customers, stayed high at over 260 million tonnes CO₂-e. This highlights the challenge of lowering emissions throughout the value chain.
In 2024, Fortescue reported that it had already begun trials of electric mining haul trucks and hydrogen-fueled locomotives. The $2 billion loan will help scale these trials into full commercial deployment.
Fortescue aims to stop burning fossil fuels across its Australian iron ore operations by 2030. This “Real Zero” goal targets the absolute elimination of Scope 1 and Scope 2 emissions for its terrestrial iron ore business.
Fortescue’s Four Pillars of a Mining Makeover
The company is moving on four clear fronts:
- electrifying heavy equipment,
- building large renewable power,
- producing green hydrogen, and
- adding energy storage.
Fortescue plans to buy hundreds of electric machines. These machines will replace much of its diesel fleet and cut fuel use at scale.
On the power side, Fortescue is building utility-scale solar to run mines and support green hydrogen. It started work on a 190 MW solar farm near Cloudbreak. It is also seeking approval for a 644 MW solar hub at Turner River.
Together, these projects will add hundreds of megawatts of renewable energy to Pilbara operations. Large solar builds let Fortescue shift electricity away from diesel generators.
Green hydrogen forms a third pillar. Fortescue has a project in Pecém, Brazil, that produces 168,000 tonnes of hydrogen each year. They also have smaller projects, like the 50 MW PEM50 in Australia, which generates around 8,000 tonnes per year. Hydrogen can power heavy equipment or act as a feedstock for low-carbon steel.
The company has completed field trials. This includes a prototype battery haul truck called “Roadrunner.” It is now launching battery systems and transmission lines for major hubs like North Star Junction.
Still, Fortescue recently scaled back some green hydrogen plans and flagged a preliminary $150 million writedown tied to project changes — showing the plan remains costly and technically risky.
If Fortescue executes these steps, it expects to cut millions of tonnes of CO₂e from annual operations and meet its Real Zero target by 2030. These measures are central to its pitch as a miner turning into a green-energy industrial group.
Industry Trends and the Bigger Picture
The mining industry is under pressure to reduce emissions. Investors, customers, and regulators all want cleaner operations. The International Energy Agency (IEA) reports that mining companies worldwide contribute 4–7% of total greenhouse gas emissions. This is mostly because they rely on fossil fuels for extraction and processing.
Green financing in the mining sector is becoming more common. BloombergNEF says global investments in energy transition hit over $1.7 trillion in 2024.
Mining projects are becoming a bigger part of this trend. Fortescue’s deal with China signals a deepening link between resource supply security and sustainable financing.
If Fortescue succeeds, it could set a standard for other resource giants. They will want to align with net-zero goals and stay profitable. It also highlights how the voluntary carbon market, renewable energy credits, and clean technology investments can converge in heavy industry.
Risks, Rewards, and the Road to Real Zero
Despite the funding boost, Fortescue faces significant challenges. Switching from diesel to electric and hydrogen machinery uses new technologies. These are unproven at this scale, so they may have reliability and cost problems. Building renewable energy in remote mining areas needs careful planning and permits.
Market risks are another factor. Global demand for iron ore depends on construction and manufacturing. Economic downturns can hurt the financial success of big decarbonization projects. Additionally, geopolitical tensions between Australia and China could create uncertainty for cross-border financing and trade.
If Fortescue achieves its 2030 targets, it could eliminate more than 3 million tons of CO₂e from its operations annually. This could be one of the first big mining companies to operate without fossil fuels. This change might lower the carbon intensity in the steel supply chain.
Fortescue’s $2 billion green loan is both a financial and strategic step forward. By getting funding from China, the company gains money for its decarbonization projects. It also strengthens its relationship with a key trading partner during the green transition era.
The next few years will test Fortescue’s ability to deploy large-scale renewable energy systems and shift its heavy equipment fleet away from fossil fuels. If the company meets its targets, it could serve as a model for how resource-intensive industries can transition toward net-zero while maintaining strong market positions.
