Musk v Forrest: The clash of eco-titans and their enormous egos – Sydney Morning Herald

Forrest couldnt let that invective slide. He told the Financial Times, He [Musk] knows that, almost every time a Tesla is plugged into almost every grid in the world, it is just burning coal and oil and gas.I mean, it is doing nothing for the environment. So, his mind-boggling stupid is whitewash.

A difference of opinion around technological weaponry is legitimate enough. The science is still emerging and the jury is still out on whether green hydrogen is a commercial solution - although Forrest has spent a lot of time and resources to prove it up.

Fortescue announced in June it will replace almost half the haul trucks at its Pilbara iron ore mines with battery and hydrogen-powered units from German firm Liebherr which will use technology from WAE.Credit:Fortescue

But what is really mind-boggling is that Forrest - the ultimate businessman - has accused Musk of being too business-like.

If one strips back the theatre from Forrests announcement about Fortescues plan to eradicate the companys emissions within eight years, what you end up with is a financial road map containing two important messages for investors.

The first part of that process is to cement the investment required to transform Fortescues operations into an oasis of green. The second is a very clear statement about the yearly and cumulative savings for Fortescue.

In a nutshell, Forrest says there will be net operating cost savings of $US818 million ($1.2 billion) per annum from 2030, at prevailing market prices of diesel, gas and Australian Carbon Credit Units. (The prevailing prices of diesel and gas are currently particularly high, thanks to the war in Ukraine and a lot could change over the next couple of years.)

Fortescue has also flagged cumulative operating cost savings of $US3 billion ($4.5 billion) by 2030 and payback of capital by 2034, at prevailing market prices.

On the other side of the ledger, the miner plans to invest $US6.2 billion ($9.2 billion) of capital on renewable projects to reach its real zero emissions goal.

It is an investment that Forrest says falls well within the envelope of the promise Fortescue made to investors that no more than 10 per cent of the iron ore companys profits would be spent on Fortescue Future Industries capital expenditure.

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Needless to say, Forrest had his businessman hat firmly on his head when he created the iron ore business that funds his nascent push to create an international environmental company.

While incumbent Fortescue shareholders bought into the company to access its massive cash flows from iron ore, Forrest also has his business hat in place in recognising that a successful environmentally friendly mining company would be particularly attractive to investors looking to enhance their own eco-credentials.

Theres no doubting Forrests passion for the environment and by the same token, investors shouldnt be worried about the billionaire pursuing his passion at the expense of commercial returns.

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Musk v Forrest: The clash of eco-titans and their enormous egos - Sydney Morning Herald