Fortescue's Abandoned Gladstone Green Hydrogen Project Leaves Taxpayers with $80 Million Bill
Gladstone, Australia – Fortescue Metals Group's ambitious green hydrogen factory in Gladstone, Australia, has been abandoned, leaving Australian taxpayers with an estimated $80 million loss. The project, initially backed by $100 million from state and federal governments, has ignited a dispute over outstanding funds.
Fortescue has repaid $20 million of a federal grant, but the Queensland government is actively pursuing an additional $66 million in outstanding funds. The company had personally contributed $228 million to the project before its closure.
Project Timeline and Operations
In 2023, the federal and Queensland governments pledged $137 million for the Gladstone hydrogen technology plant. While the plant was ultimately mothballed in May 2025, it did operate for a period.
Following government-funded construction, the facility tested hydrogen electrolysers for seven weeks, with testing costs estimated at $14 million per week for taxpayers.
Leading up to its closure, in April 2024, the Moroccan Competition Council approved a joint venture between Morocco's OCP Group and Fortescue for projects in Morocco. Delegations from the Moroccan OCP Group, CS Energy, and Santos had visited the Gladstone hydrogen electrolyser in December 2024.
Government and Company Statements
The financial fallout has led to strong statements from both government officials and Fortescue executives.
Industry Minister Tim Ayres stated in September that the government would pursue the company for public funds, citing grant terms requiring assets to be used for their designated purpose. A Department of Industry spokesperson confirmed the repayment of $20 million from the federal grant.
Queensland Deputy Premier Jarrod Bleijie minced no words, requesting Fortescue repay the funding and describing the Gladstone site as a "vanity project."
In response, Fortescue CEO Dino Otranto emphasized the company was taking a risk attempting to build a new industry, viewing government funding as a co-investment in economic growth. He acknowledged that not all investments deliver immediately and that setbacks occur. A Fortescue spokesperson stated the company intends to return funds as required under the grant agreement.
Green Hydrogen Challenges and Fortescue's Future
The abandonment of the Gladstone project underscores significant challenges facing green hydrogen technology. These include high production costs, limited delivery infrastructure, and a lack of guaranteed supply, making it considerably more expensive than hydrogen produced from fossil fuels.
Alison Reeve, energy director at the Grattan Institute, noted that electricity is generally more efficient than converting it to hydrogen for uses like transport. She also stated that new technology developments, including hydrogen, typically require taxpayer-funded research and early commercialization due to associated risks.
In light of these hurdles, Fortescue has abandoned its ambitious goal to produce 15 million tonnes of green hydrogen annually by 2030 and closed plants in Gladstone and Arizona in May. Company Chairman Andrew Forrest has, however, indicated plans for a cheaper "new form of hydrogen."
Fortescue continues to pursue other international green hydrogen ventures, having received over $343 million in funding from the European Union for its Holmaneset Project in Norway and investing in the Pecem project in Brazil.
Related Context and Clarifications
Reports in April 2024 indicated a personal interaction between Andrew Forrest and Moroccan energy minister Leila Benali in Paris. Benali denied any connection to the person in the photograph, and her Ministry of Energy later described the publication of the photograph as offensive and part of a campaign to defame her. Forrest and Benali did not comment on their personal lives.
Clarifications:
- The $17 billion in investments currently underway in Queensland are across Fortescue, Minderoo, and Tattarang combined.
- The $14 million per week estimate for taxpayers refers specifically to the cost of testing hydrogen electrolysers, not their general operation.