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Fortescue Metals Group slips on $9.2b fossil fuel-free target by 2030

Shares in Fortescue Metals Group slipped while its rivals gained ground on Tuesday after chairman Andrew Forrest pledged $US6.2 billion ($9.2b) to eliminate fossil fuel use from its operations to achieve real zero emissions by 2030.

While BHP and Rio Tinto jumped 3.6 per cent and 2.5 per cent respectively as Singapore iron ore futures rose 1.4 per cent to $US98.40 to end a four-day losing streak, Fortescue shares closed off 15¢ to $17.30.

The divergence comes after Mr Forrest told reporters from New York on Tuesday morning that the iron ore miner would “comfortably” achieve its stepped-up emissions reduction ambition, which he argued would save Fortescue $US4 per tonne on its operating costs and add at least 50¢ to its share price.

The iron ore miner’s founder, chairman and biggest shareholder made the comment on a conference call from New York after the company announced it would spend $US6.2b to achieve its more aggressive target.

Fortescue had already committed to achieve net zero for scope one and two emissions, but the new target aims to eliminate fossil fuel use entirely and not rely on carbon offsets.

The company believes the initiative will reduce operating costs by $US818 million a year, avoid 3 million tonnes of CO2-equivalent emissions a year and enable it to supply its customers with a “carbon free” iron ore product.

In doing so, he argued the company would set a new standard for miners globally in the reduction of carbon emissions.

“We will be the proof, if you will, that (with) the right technology, the right strategy, the right investment, even major polluters like us can eradicate fossil fuel use and avoid tens of millions of tonnes of carbon emissions over time,” he said.

Mr Forrest said he believed the company would achieve its target comfortably with offsets used as a “final resort only”.

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