Fortescue Strikes Deal to Build Fleet of Hydrogen-Fueled Buses

(Bloomberg) -- Fortescue Metals Group Ltd. has teamed with U.S. startup Hyzon Motors to build a fleet of hydrogen fuel-cell buses. The world’s fourth-biggest exporter of iron ore plans to deploy the coaches in the Pilbara mining region in Western Australia starting from mid-next year.

Hyzon will supply 10 buses to replace a fleet of diesel vehicles at the Christmas Creek mine under a A$32 million ($23 million) project that will also involve installation of a refueling station to use energy from Fortescue’s solar-gas hybrid system, the Perth-based company said in a statement Monday.

The custom-built buses will initially be imported from outside of Australia, but Hyzon plans to eventually manufacture them locally. In July, Hyzon announced a manufacturing plant in the Netherlands as part of a venture alongside Holthausen Clean Technology BV.

For Fortescue, the Hyzon deal is another step in its commitment to reducing emissions. Miners often use large buses to ferry workers to and from airstrips, and around vast mining sites.

“Fortescue’s mobile fleet represents around 400 to 450 million liters of diesel consumption per year and presents a significant opportunity for hydrogen to be used as a replacement,” Fortescue Deputy Chief Executive Officer Julie Shuttleworth said in a statement.

The use of hydrogen and fuel-cell technology in commercial vehicles isn’t new. However, investor interest has intensified since U.S. startup Nikola Corp. listed its shares in early June. Despite zero revenue, Nikola quickly saw its market value surge to almost $29 billion. Nikola has promised global fleets of hydrogen fuel-cell semitrucks and other commercial vehicles that it will start to build in 2023.

Promising Outlook

Hyzon has similarly big ambitions. According to its own projections, it will have its hydrogen fuel-cell vehicles -- including semitrucks -- on roads sooner than Nikola. The New York-based group says it expects to be the first global manufacturer of fuel-cell commercial vehicles in series production and maintains some vehicles will be deployed as soon as November.

Use of the technology for coaches is currently small. At the start of this year there were around 4,200 fuel-cell buses globally, according to BloombergNEF. Longer term, the outlook is more promising -- fuel-cell vehicles are expected to capture 30% of bus fleets around the world by 2050, and as much as 75% of heavy vehicle fleets, with growth driven primarily by China and the European Union.

Fortescue has called on mining-equipment suppliers to study hydrogen as a fuel source for giant trucks as it seeks to replace its remaining diesel-powered vehicles at operations in remote Western Australia by 2030.

In April, the company agreed to help develop vehicle-refueling technology that will use hydrogen to power a fleet of Toyota Mirai fuel-cell cars in a pilot project in Perth. It also is part of a broader alliance to advance export technologies with the Australian government’s science research arm.

Beyond its own operations, Fortescue’s billionaire founder Andrew Forrest has led a drive to position the company to eventually become a major exporter of hydrogen from Australia.

Hyzon was spun out of Singapore-based fuel-cell company Horizon Fuel Cell. It has operations in the U.S., Europe and Australasia.

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