Why Fortescue Metals (ASX:FMG) shares were making waves today?

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Why Fortescue Metals (ASX:FMG) shares were making waves today?

ASX, FMG, high volatility
Image source: © Maximusnd | Megapixl.com

Highlights 

  • Fortescue Metals shares have been on the radar of investors as the company highlighted its intent to sign a green hydrogen supply agreement.
  • Following the announcement coming from Fortescue Future Industries (FFI), shares of FMG has shown high volatility in the last two days.
  • FFI aims at supplying green hydrogen and its derivatives to Covestro, a German chemicals maker.

Australian iron-ore company Fortescue Metals Group Limited’s (ASX:FMG) shares have been on the investors’ radar as the company highlighted its intent to sign a green hydrogen supply agreement.

Following the announcement from Fortescue Future Industries (FFI) segment, shares of FMG has shown high volatility in the last two days. On Tuesday, the shares of FMG last exchanged hands at AU$20.75, down 0.097% on ASX.

Green hydrogen supply agreement

Under the long-term supply agreement, FFI aims at supplying green hydrogen and its derivatives to Covestro, a German chemicals maker.

Memorandum of Understanding (MoU) states that the agreement will be formalised between FFI and Covestro, under which up to 100,000 tonnes of green hydrogen will be supplied to Covestro per year. With green hydrogen, grey hydrogen and its derivatives will be replaced by Covestro, and the company will be able to reduce emissions by up to 900,000 tonnes of carbon dioxide every year.

The deliveries are expected across three continents, Europe, North America and Asia and are expected to begin by 2024.

Commenting on the development, Andrew Forrest, FFI’s Chairman, said:

About Covestro

Covestro is a Germany-based company that supplies high-tech polymer materials globally. The company has committed itself to move towards renewable energies and employing fossil-free alternatives for producing high-performance polymers. Entering a partnership with FFI adds value to Covestro’s commitments to move toward renewable energy sources.

Covestro’s CEO, Markus Steilemann said that,

Bottom line

By entering into the hydrogen supply agreement with Covestro, Fortescue aims at diversifying its earnings sources into the renewable energy space.

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