Profit halved at Andrew Forrest’s Fortescue as Trump plays havoc with hydrogen dreams and iron ore prices fall

A mercurial Trump administration and election uncertainty at home have forced Fortescue to delay two hydrogen projects, as weakening iron ore prices eat into the miner’s profits. Fortescue’s green energy chief Mark Hutchinson assured investors again that the group was still “fully committed” to green energy and hydrogen ambitions, but that rocky government policy had created “uncertainty” for the business. Shares in the company closed 6.2 per cent lower to $18.24 as the market took stock of the miner’s half year results ended December 2024. Amid the political uncertainty, Fortescue has clawed back its green energy budget for the financial year from an anticipated $US500m ($787.3m) to $US400m. And timelines for Fortescue’s $US550m Arizona liquid green hydrogen project in the US, and a $150m electrolyser factory in Gladstone Queensland are now both being “reconsidered” with an update on where they go next due by July. Following the election of US President Donald Trump, Mr Hutchinson said grants promised under the former administration’s Inflation Reduction Act and hydrogen tax credits had “come into question”. It marks the latest case of uncertainty among business since Trump became the leader of the free world. His call to impose a sweeping 25 per cent tariff on steel and aluminium has left Australian producers trying to tot up the potential financial impact on their businesses, while holding on to hope they might be spared the imposts. “The US is an interesting place with the Trump administration, we’re really analysing what that means … until we really have a much clearer view on that, we are being quite cautious about what we’re doing,” Mr Hutchinson told analysts on Thursday. In Australia Fortescue faces the potential prospect of a new Federal Government led by Peter Dutton, who has expressed opposition to production tax credits and is pushing nuclear power over the likes of solar, wind and hydrogen in his election campaign. The credits successfully pushed for by mining companies are designed to incentivise local production of critical minerals and green hydrogen. The Liberals have blasted the credits as tax cuts for “billionaires”, and would cut off another avenue of potential government support for Fortecue’s green ambitions. Access to cheaper electricity – a key processing input - still remains a big barrier to making Fortescue’s hydrogen projects economically viable. Meanwhile, Fortescue continues to feel the pinch of a weaker steel and iron ore market, and ran into further delays at its Iron Bridge project. The target of hitting nameplate capacity of 22 million tonnes a year from the long-troubled Pilbara magnetite operation by September this year has been canned to complete more technical works. Prices for Fortescue’s iron ore and its key revenue-driver fell 20 per cent. Average revenue per tonne dropped to $US85.24 for the last six months of 2024 compared with $US108.19 for the last six months of 2023. Production costs were also higher. Operational performance was stronger with shipments up 3 per cent on the prior corresponding period, taking total output for the half to a record 97.1 million tonnes. That helped build revenues of $US7.6b, which were lower by 20 per cent. But ultimately weaker iron ore earnings combined with depreciation and amortisation on Iron Bridge, halved profits from $US3.3b to $US1.6b. More broadly it comes with Chinese steel demand in steady decline, as its property and industrial sectors cool down from a substantial growth boom over the past two decades. Shareholder dividends have been slashed from a $1.08 interim payout per share to 50¢ as a result. As well as tighter budgets in energy, iron ore spending has been narrowed to a $US3.5b to $US3.8b band from a previous $US3.2b to $US3.8b. Outside of business operations, Fortescue is dealing with a legal battle against Traditional Owner group Yindjibarndi Ngurra Aboriginal Corporation. Up to $1.8 billion in compensation claims are currently being argued over in the Federal Court, however there is still no indication of the potential looming damage on the miner’s balance sheet. “It is a contingent amount at the moment, but we won’t be disclosing anything, until the conversation becomes a lot clearer,” chief financial officer Apple Paget said.