Fortescue’s future tech arm invests $22m in white hydrogen explorer HyTerra

Fortescue’s future tech arm invests $22m in white hydrogen explorer HyTerra

Fortescue is exploring the use of hydrogen in its vehicle fleet with this prototype truck currently being tested.

Fortescue Metals Group's (ASX: FMG) future technology division is taking a strategic $22 million stake in HyTerra, giving it a foothold in the white hydrogen sector which has been hailed as a technology that can accelerate industrial decarbonisation efforts globally.

The Andrew Forrest-led mining group’s Fortescue Future Industries Technologies subsidiary is seeking to secure a 39.8 per cent stake in HyTerra to help drive a geophysics and exploration program in the US.

White hydrogen is a naturally produced underground hydrogen that can be found in rocks beyond the sedimentary basin and is extracted by conventional techniques. It is said to be non-polluting and cheaper than conventional hydrogen that is chemically produced.

White hydrogen has been touted for its potential to decarbonise the production of steel, aluminum and fertilizers, with additional applications in transport for the likes of fuel cell vehicles that convert hydrogen into electricity.

HyTerra is exploring for white hydrogen and helium resources within its fully owned leases in Kansas, known as the Nemaha Project.

Fortescue’s $11.9 million investment in HyTerra, which is subject to shareholder approval, is aimed at fully funding an expanded initial exploration phase of the Nemaha Project that will significantly expand its pre-drill acreage and open up new drilling prospects identified by the company.

HyTerra says the partnership has the potential to unlock commercial opportunities for the company in the US Midwest.

“An investment by Fortescue is a testimony to the hard work and delivery performance of the HyTerra team, the diverse geological plays available within our Nemaha Project leases, and our global growth opportunities in the pipeline,” says HyTerra’s executive director Benjamin Mee.

“This investment would enable HyTerra to have a strong financial position going forward; but it’s the possibility to propel the global decarbonisation journey with such a visionary company that is truly exciting.

“HyTerra would then drill six wells across multiple geological plays to choose the best areas to develop and through the strategic alliance with Fortescue use this knowledge and data to pursue other global opportunities.”

Under the agreement, Fortescue will subscribe for 644.11 million HyTerra shares at 3.4c each, plus 322.06 million options exercisable at 5.1c each over three years from the date of issue.

Shares in HyTerra shot up more than 61 per cent to 5c on the announcement by 2pm (AEST).

Subject to shareholder approval being achieved, the deal is expected to be completed by 11 November 2024.

It will make Fortescue, which has been exploring a range of sustainable technologies for its own mine facilities, the largest shareholder of HyTerra, entitling the mining giant to nominate a director to the board.

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