Good morning or afternoon, everybody, and welcome to Fortescue's FY21 full-year results presentation. I am delighted that today we are joined by Fortescue founder and chairman, Dr. Andrew Forrest, AO. Andrew, would you like to say a few words?
Thank you, Elizabeth. Just to extend my warm welcome to all of you, to pass on my deep gratitude that these truly spectacular results—yes, of course—were carried on the wind of strong commodity prices. Predicting strong commodity prices is notoriously difficult. If I was asked, "Are these the end of them?" I'd say no. What I've been sure of is that commodity price predictors never get it right. To say that the team has performed way beyond the commodity price is a great understatement. The records set throughout this company in production, in shipping, in safety, in performance, in their ability to run major projects, to develop major projects, to take all the tough decisions whenever they're required is, I think, without current peer.
I'd just like to put my congratulations to the team on the record and say thank you all and hand back to Elizabeth gratefully.
Thank you, Andrew. Joining me today is also Ian Wells, Chief Financial Officer, and Julie Shuttleworth, Fortescue Future Industries Chief Executive Officer. Whether you're participating via phone or webcast, I do thank you for joining us. Those who have joined via webcast, you will be able to follow along with the slides. For those who've dialed in separately, there is a copy of our FY21 results presentation available on our website. That brings me to our full-year results, which build on the excellent operational performance that we released to the market just a few weeks ago. Today's announcement is truly a testament to the hard work and dedication of the entire Fortescue team, who are guided by our unique culture and values, which are just as relevant today as they were 18 years ago when Fortescue was established.
The 2021 financial year was a second consecutive year of record achievements, with the team delivering outstanding results across all of our key operating and financial measures. I will turn first to safety. The team delivered our lowest ever Total Recordable Injury Frequency Rate, or TRIFR, of 2 against the backdrop of an incredibly challenging year, one in which we saw multiple COVID lockdowns in Western Australia, but also across the nation. The current situation on the East Coast, and especially New South Wales, is a reminder that we're still in the midst of a global pandemic. Vaccination is absolutely vital to Australia's ongoing response to COVID-19. The health and safety of the Fortescue family is our highest priority, and we encourage all eligible team members to get vaccinated.
We believe that vaccination is the key to protecting our workforce and the significant contribution that the resources sector is making to the economy, as well as achieving workforce mobility across Australia. Before I turn to today's financial results, I would like to again highlight our production results that we released with the quarterly last month. The strong performance by the team across the entire supply chain contributed to our highest ever annual shipments of 182.2 million tons. Reflecting our focus on cost management and the ongoing investments we have been making in innovation and technology, we have maintained our industry-leading cost position with a C1 cost for FY2021 of AUD 13.93 a ton. The strength of this operating performance, combined with record average revenue, has seen earnings and operating cash flow surpass any year in Fortescue's history.
Some highlights of this record financial result include revenue of $ 22.3 billion, underlying EBITDA of $ 16.4 billion, and net profit after tax of $ 10.3 billion, which is a 117% increase compared to last year. Our integrated operations and marketing strategy continued to deliver significant benefits during FY2021 and allowed us to adapt and respond to market conditions. This is firmly reflected in our 72% increase in Fortescue's revenue to $ 135 per ton. Throughout the COVID-19 pandemic, Australia's mining and resources sector has continued to drive the country's economic success, with the industry generating a new record high of almost AUD 300 billion in export revenues in FY2021, and with iron ore exports alone contributing AUD 152 billion. That is the equivalent of around 33% of Australia's total export revenue.
The strength of our operations and balance sheet means that we can continue to invest in our business and, importantly, invest in growth. During the year, the team celebrated the delivery of our newest mining operation at Eliwana, with the operations team achieving the annualized rate of production through the ore processing facility of 30 million tonnes per annum within six months of first ore. Reflecting the low capital intensity of the project, as well as the current strength of the market, we're anticipating a short payback period on our investment in Eliwana. The Iron Bridge Megatite project is a strategic investment which will provide us with an enhanced product range to meet future customer demand. This project represents one of the few large-scale iron ore growth projects under construction globally.
Reflecting Fortescue's outstanding performance in FY2021 and our strong commitment to delivering shareholder returns, we have today announced a final dividend of AUD 2.11 per share. This, along with our interim dividend of AUD 1.47 per share, represents total dividends of AUD 11 billion. That is a payout ratio of 80% of full-year net profit after tax. This is consistent with our stated intent to target the top end of our policy to pay out a range of 50%-80% of net profit after tax. On that, I am going to hand over to Ian for an update on the record financial performance. Ian.
Thanks, Elizabeth. Hi, everyone. I'd just like to start by saying what a privilege it is to be presenting a summary of our financial performance, where we achieved records across all of the key financial measures and have once again reported a nice clean set of numbers driven by consistent operating performance, where low operating costs and capital discipline drives margin, free cash flow generation, and return on capital. On reflection, FY2021 was not without its challenges, including managing COVID-19, the impacts of the stronger Australian dollar, tightening materials and labor markets, together with mine plan driven cost escalation. We still continue to reinvest in our assets, and this investment delivers high availability and productivity. That's reflected in our ability to again increase production, continue to, in fact, increase production levels year on year and, as a result, maximize value.
In the year, we commissioned Eliwana, and this is our third mining hub, and that opens up the Western Pilbara region and increases our systems, ore processing, and rail capacity. As you heard from Elizabeth, Eliwana is a very high return and a fast payback investment. Turning to the FY2021 results and starting with revenue, $22.3 billion with market price realisation and also volume contributing to the 74% increase over FY2020. Revenue, coupled with strong cost management, contributed to EBITDA of $16.4 billion, with EBITDA in the second half of almost $10 billion, which in and of itself exceeded full-year FY2020 EBITDA of $8.4 billion. The FY2021 EBITDA margin was 73% or $99 a tonne. Drilling down on slide 12 of the pack, which you all are aware, that's one of my favourites.
On the webcast, you can see we have continued to generate strong margins through the cycle with the five-year average EBITDA margin now almost $50 per tonne. That margin, of course, is impacted by market factors together with the things that we can control, including the focus on cost performance along with volume and product mix. While the market is cyclical, our realisation has been around 85% of the Platts 62% index since the second half of FY2019. As we mentioned in the June quarterly, our FY2021 operating costs did increase, largely driven by an 11% appreciation in the average AUD/USD exchange rate, together with the impact of the ramp-up at Eliwana. We continue to focus on innovation and technology to drive productivity gains and maintain our industry-leading cost position.
EBITDA flows through to NPAT, which increased 117% to $10.3 billion, and earnings per share were $3.35. That translates to AUD 4.48 and implies an earnings yield of over 22% on Fortescue's current share price. A couple of points to note on the P&L, on FFI expenditure of $104 million. That is included in our other expenses and further detail we have provided in the financial statements. We also incurred a $54 million after-tax expense for the early retirement of debt related to the refinancing that we did in March, which impacts reported net profit after tax. On cash flow, with the iron ore prepayments fully amortized by the end of FY2020, our impact to free cash flow reconciliation is relatively straightforward and is represented by two items. One is the variance in depreciation to capital expenditure, and the second is the timing of tax payments.
For FY21, CapEx of $3.6 billion was higher than depreciation of $1.4 billion, driven by our investment in growth. Our major projects, Eliwana, Iron Bridge, and the Pilbara Energy Connect, which together amounted to $2.1 billion. Our higher earnings led to an increase in our provision for income tax, and that's due to the final tax payment for FY21 of approximately $1 billion, and that'll be paid later in the year in December. The free cash flow available for debt and dividends was a record $9 billion, and this contributed to cash on hand increasing to $6.9 billion at 30 June. Moving on to capital allocation, our framework incorporates the four pillars of reinvesting in the business, maintaining a strong balance sheet, paying returns back to shareholders, and investing in growth.
As we guided at the quarterly, FY22 CapEx includes AUD 1.4 billion in sustaining and development CapEx, as well as AUD 1.1-1.4 billion on growth projects, which is mostly representative of Iron Bridge. A point on the balance sheet, you'll note that there is no longer the joint venture contribution liability. That is because those payments were made in FY21, and going forward, our share of Iron Bridge CapEx will be proportionate to our 69% joint venture interest. On slide 16, another favorite, you can see our balance sheet and debt capital structure provides future funding capacity with our gross debt at AUD 4.3 billion at 30 June. Gross debt to last 12 months EBITDA is just 0.3 times in gross gearing. That is the book value of debt over debt plus equity is down to 19%.
Both of those ratios are well inside our target investment-grade credit metrics, which is gross debt to EBITDA of 1-2 times and gross gearing of 30%-40% through the cycle. As you heard from Elizabeth, the fully franked final dividend declared by the board of AUD 2.11 a share increases FY21 total dividends to AUD 3.58. That represents a payout ratio of 80% of NPAT. The final dividend is worth approximately $4.7 billion. That represents an allocation of almost 70% of the 30 June closing cash balance. For a bit of perspective, the final dividend offers a fully franked 10% yield in its own right, while the total FY21 dividend of AUD 3.58 represents almost an 18% yield at Fortescue's recent trading levels. Discipline allocation is really important. For us, that comes back to doing what we say we are going to do.
That track record is evident on slide 17, where you can see that since 2014, and that was the year we ramped up production to over 100 million tonnes per annum, Fortescue has generated $50 billion of EBITDA and an average margin of 57%, and reported $25 billion of net profit after tax generated at an average return on capital of 26%. Of the $39 billion of net operating cash flow generated over that period, $11 billion has been reinvested back in the business in a combination of sustaining and growth CapEx. $9 billion of debt has been repaid, and over $17 billion of dividends has been distributed to shareholders, inclusive of the dividend declared today. That represents a payout ratio of almost 70% of net profit after tax over that period.
In closing, we've achieved excellent financial results for FY2021 with record free cash flow generation and a return on capital employed of 66%. Our balance sheet is strong, putting us in a great position heading into FY2022. We remain focused on the things that we can control, which is safety, delivering on our operations and marketing strategy, and maintaining capital discipline, which in turn creates long-term shareholder value, a combination of capital turns and growth. On that note, Elizabeth, back to you.
Thanks, Ian. Today we also released our FY21 sustainability report and our separate climate change report. As a business, we know that sustainability has never been more important to our stakeholders. We're seeing ongoing changes in societal expectations and a generational shift in our key stakeholders, which includes our investors and our team members. That means that we're seeing increased interest across the range of ESG considerations. From the outset, it has been our vision to ensure that the communities in which we operate benefit from our growth and development. Our continued commitment to empowering thriving communities was demonstrated by our delivery of AUD 30 billion in total global economic contribution this year.
That includes AUD 8 billion in taxes, state royalties, and other government payments, as well as social investment of over AUD 63 million in our communities through financial and income support of a range of philanthropic community and training programs. During the year, we celebrated the 10th anniversary of our Billion Opportunities Program, which has awarded now AUD 3.5 billion in contracts to Aboriginal businesses and joint ventures since its inception. We are proud to be one of Australia's largest employers of Aboriginal people, representing 10% of our Australian workforce and 14% of our Pilbara operations. Our female employment rate increased last year and reached 21%, with 25% of senior leadership roles held by women. Moving forward, we have a very clear focus on ensuring we have a workforce that reflects the community in which we live.
Importantly, in March this year, we announced our industry-leading target to achieve carbon neutrality by 2030. We have set clear short-term priorities on our pathway to decarbonization, including investing in renewable energy through Pilbara Energy Connect. In line with this commitment, Fortescue's board has recently determined that we will establish goals to tackle emissions across our value chain, with specific targets and a framework for our approach to scope three emissions to be developed and announced by the end of next month. Fortescue Future Industries will be a key enabler of this target, with a range of heavy industry decarbonization initiatives underway to eliminate our reliance on fossil fuels. Leveraging on Fortescue's world-leading track record of innovation and infrastructure, FFI will position Fortescue at the forefront of the renewable hydrogen industry. On that, I'm going to ask our Chairman, Dr.
Andrew Forrest, to expand on the vision for FFI. Andrew.
Thank you, Elizabeth. Thank you, ladies and gentlemen. We go nowhere at FFI but for the great track record, the great achievements, the record after record since 2003 of the Fortescue Metals Group. It is their record, our record, of making the tough decisions when they need to be made, of setting ourselves those incredibly stretched targets, and on the whole, meeting them and being prepared to fail and fail fast when we can't or don't, but being proud of the fact that in every aspect of the organization, you've got women and men who know that they've done their best for this organization and for building our country.
It's leveraging this track record of innovation, this track record of determination, this track record of excellent implementation and operation of infrastructure, which gives me such confidence that I will be able to speak to you with meaning about what I see as the sight and the sound and the smell of our future. It is empowered by a strict allocation of capital, of net profit after tax of 10%. We are often questioned on that. Is this too high? Is this too low? I'd say it's right. We have adequate capital to do everything we need to do, so it's not too low. We have a string of investors around the world with much greater liquidity than us.
Even though we're one of the strongest balance sheet and liquidity-driven mining companies in the world, there are those who are all cash and need to deploy that cash, and their customers, their investors want to see it deployed in the renewable sector. That is why Fortescue is evolving into the world's first vertically integrated renewables and resources company. We'll keep to our dividend ratio with all the discipline that you've seen from Elizabeth and from Ian and their team. As we've fought so long and so hard for that strong balance sheet, we're never going to give it up.
The sweat and the tears, the determination, the calculated risk we took to create that strong balance sheet will stay, as will our attitude to return capital to shareholders and keep our management team, keep our leadership team, keep our board under pressure to continue to really perform on the excess capital which this great business generates. Before I turn to FFI, I'd like to take you, ladies and gentlemen, to the experience I had only recently, which really typifies all of Fortescue. I visited our green team, Fortescue's green team, after they'd been in operation only 130 days. I'd have to say that the upwelling I felt of emotion and witness in my own eyes, I'd hope was just dismissed by my mates as just dust in the yard where we were, but it actually wasn't. I had this experience of what our future will look like.
Certainly, it will look like if we get this right and we grasp the challenges ahead. I say grasp the challenges ahead because all industries, and the Australian economy is made up of industry, and all industries made up of businesses operate at their best with ambition or with targets, which are often merged into one. If we just loosely did what we thought we should do, did not set ourselves goals, did not set ourselves ambitions, then we would probably be an economy of pretty average businesses and therefore pretty average industries. That would, of course, be a pretty average economy. We do not. We set ourselves targets. We set ourselves ambitions. We all work collectively from one business to another, from one industry to another, on the strength of the targets we have set ourselves.
I am certainly looking along with the rest of our country for government leadership on this. Australia needs a carbon neutral target, a target which we can then all get in under, all operate to, and all make happen. It is within that environment that some of the toughest targets I have ever seen are placed on Fortescue by Fortescue themselves. When I ask you to consider whether or not your car, your train, your truck, whatever it is, the ship you are on, whether or not when they start, do you see a plume of smoke or hear sound of the future? The answer to that is no. Even in your battery car, there is a plume of smoke and there is sound somewhere else in the electricity grid because it is not green. Same with your trains, same with your trucks, same with the ships.
Only the other day, when I visited the green team, a very large haul pack truck, a very large haul truck started, one with all nine fridges many of us have grown up with. It started, as you would predict, with a lot of sound and a lot of smoke. When that truck operated and operated under pressure, high RPMs, there was significantly more sound and smoke, and it operated well. A truck which had its entire powertrain designed and built and installed and commissioned in 130 days started. It was the world's first hydrogen fuel cell truck. I know this because I was the third person to drive a hydrogen fuel cell truck, haul truck. Only the two engineers who had designed that truck had driven it beforehand.
The point I'm making here, which led to that upwelling of emotion in me, is that when that truck started, there was no smoke. There was no sound, not even indirectly at a power station somewhere else. There was no smell of fuel and carbon. In fact, when that truck was under even more pressure, under even greater engine revolutions, the only sound you could hear was air fan coolers and, for sight, small wisps of steam, pure hydrogen and oxygen, purer water than you'll ever get from a bottle of Evian. That, to me, was the sight, sound, and smell of the future. I witnessed a train engine running on ammonia, a huge mobile equipment bigger than some people's houses, running on hydrogen fuel cell like a truck.
It impacted me not of the tremendous fortitude only, the huge determination of our team only, their sacrifice to meet those targets, sometimes working around the clock, their courage to take calculated risk with a solid plan B, and their innovation to try whatever they could and to fail and fail quick and then move on fast, expediently from the lessons of that failure, which can only be driven from that failure. I wondered, ladies and gentlemen, why this has not happened before. Why, in 130 days alone, are there such massive technical breakthroughs by only one company determined, yes, innovative, yes, resourced, yes, but only one company in the world, which is a heavy industry, heavy manufacturing company, has nailed its mast, has nailed to its mast 2030 carbon neutrality.
Only one company in the world has said, "We're absolutely going to do this and supply massive green energy grids through green hydrogen and green ammonia so that many other companies can do exactly the same thing without that commensurate risk or reward that we are taking." While I think it's great that companies which society relies on, which don't emit any carbon, bravely announce that they're going green by some date, I think really that's just an interesting footnote. It is only those industries, it is only those companies which are heavy carbon emitters, which society relies on, which by going green can make the difference and start to slow and then eliminate global warming we all face. That global warming is a certainty unless companies like us act and are other companies acting who are like us. At this stage, I'm only hearing crickets, silence.
That is okay. We will continue to lead this industry as a heavy carbon emitter going rapidly green as an organization which has a deep strategy in place to produce the fuels the world needs, which are zero carbon, and to create the economy and the employment which every Australian is going to need. Whatever is the future of the fossil fuel sector, what we know for sure is that the green energy sector will be the largest industry in the world. All those companies who at this stage are silent alongside us with a strong 2030 target and with ambitions to produce from that energy their own green industries to sell to others, they will all join us. It is not a matter of if. It is simply a matter of when. I am deeply proud of Fortescue's major diversification.
It's simple vision to be the world's major and only, at this stage, vertically integrated renewables and resources energy company. To do so, ladies and gentlemen, through driving value into Fortescue shares, through lowering our operating costs, and through increasing our profits and return to shareholders. With that, Elizabeth, thank you for giving me the stage for a moment, and I'll gratefully hand back.
Thank you, Andrew. In summary, we've achieved outstanding results for FY21, and guided by our unique culture and values, we have delivered a second consecutive year of record performance with shipments, earnings, and operating cash flow surpassing any year in Fortescue's history. Through the Iron Bridge Magnetite project and FFI, we're investing in the growth of our iron ore operations as well as pursuing ambitious global opportunities in renewable energy and green industries.
We know that we continue to operate in a cyclical market, and we are agile, and we respond to market conditions to ensure that we remain a reliable supplier of iron ore to our customers. As a low-cost producer, we continue to generate strong margins through the cycles. Ladies and gentlemen, we have already seen a very strong start to FY2022, and our guidance, as we announced last month, is for iron ore shipments in the range of 180-185 million tons, C1 costs of $15-$15.50 a ton, which firmly cements our industry-leading cost position. Our capital expenditure, excluding FFI, is in the range of $2.8-$3.2 billion. It is through this operational excellence, our sustained focus on productivity, and our disciplined approach to capital allocation that we will continue to deliver benefits to all of our stakeholders.
That includes our shareholders, our customers, our employees, and the communities in which we operate. On behalf of Fortescue's board and executive, I'd like to thank the entire Fortescue family for their contributions in FY21. Our success is only a testament to their hard work and dedication. By keeping safety and family at the heart of everything we do, I know that we will continue to position ourselves for future success. Thank you. I'll now hand back to Melanie to facilitate Q&A. Melanie, thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question.
A reminder for participants to please limit their questions to two per person. Should you wish to ask further questions, you will need to rejoin the queue. Your first question comes from Raul Anand , with Morgan Stanley, Australia. Please go ahead.
Hi, Elizabeth, Ian, Julie, Andrew, and team. Look, I've got two questions. The first one's on the reserve and resource update, and the second one's on FFI. The first one's around the resource reduction that we had in the announcement made late last week. I just wanted to touch upon a 465 million ton reduction in resource. Obviously, you have a large resource, so that's not perhaps the focus. I wanted to check what type of drilling has been carried out over the past year that led to this, and what portion of the resource was drilled.
I'm just trying to gauge a percentage, perhaps, out of the amount that was drilled in terms of what's been reduced. That's the first one. The second, around FFI, perhaps I just wanted to get a bit more clarity on the strategy, perhaps. A major feed in terms of the new haulage truck, like Andrew talked about. All I wanted to understand was, is there an opportunity here to be open source in terms of the technologies you develop so that they're more widely accepted and adopted? Is that the plan as well down the road? Also, perhaps if you can provide clarity on geographies, if there's a focus there in terms of the risk that we can potentially face. Also, if operator status is important in all the investments. Thanks.
I think that's about four or five questions, Raul. We'll let you off.
Apologies.
I'll start with reserves and resources. Look, I mean, Andy, we'll get back to you on sort of some of the % that you asked about. Overall, once we saw a reduction in operating properties, we saw an increase in development properties. We have actually had an extensive drilling campaign across the Pilbara. We've increased, as you've seen, year on year our exploration expenditure. That has been well and truly invested in drilling out those areas. We've called out in the report the various areas, whether it's Mindy South, which added 279 million tons. We've also been drilling across Wonmunna , other parts of the tenement holdings. I think that we did some density drilling as well, which you can see referenced in the operating profits across Cloudbreak, Christmas Creek, Queens, Eliwana, and majority of Flying Fish deposits. It's been pretty comprehensive.
As I said, Andy, you can get back to you on any specifics on %. But effectively, we've seen that increase in our development properties, a reduction in operating properties, but overall, that's reflecting of a pretty comprehensive drilling campaign and one that will continue into FY2022. Maybe on FFI, of course. Andrew?
Thank you. I am joined here by our Chief Executive Officer, Julie Shuttleworth, our Chief Financial Officer, Michael Masterman, our Head of Hydrogen, Dr. Michael Dolan. By all means, team, jump in whenever you like. On open source, let's go straight to the question of technology. Fortescue, as you recall, kicked off life at around a $58 a ton iron ore producer and implemented existing and new technologies which it developed and, with really serious determination, scaled to be the size that it is now.
Of course, from the late 1950s now into the early mid-teens of operating costs, very dramatic falls. We do intend to lead the technology industry. We have around 215 technology patents to our name now. That's just to give you an idea of scale, it is around double what that very successful hydrogen technology company, Plug Power, in North America has to its name. We really have continued to drive really seriously the technology cutting edge of Fortescue straight from the iron ore industry into the renewable sector, as we have half a dozen or so small but I think very meaningful acquisitions. To your question, will we make this open source immediately?
I think once we know we have completely removed the risk that it has been fully integrated into Fortescue, that we have now proven within Fortescue, which includes FMG and FFI, to the world that turning green is a very profitable experience where you lower your operating costs, where you can attract premium for your products, then I think we are going to be very comfortable releasing those technologies and others, which we will develop and will acquire to the world because you are right. This will drive demand for our major product, which is hydrogen, and then all the products from hydrogen, which includes green ammonia, green fertilisers, green iron, etc., etc. As to geographies, yes, we are very cognizant on the risk we take. We have, as you would guess, solid plan Bs in place for everything we do.
While we will be making appointments throughout North America or continue making appointments throughout North America and Europe and the first world, we will also not be leaving behind the developing world, which stands to benefit massively from the advent of what will be the largest industry in the world. That is the green energy, green hydrogen industry. In terms of operating status, we currently operate remote sites of very significant scale who are extremely remote. We operate them from our technology and operating centre known as the Hive. It is already a 24-hour operation. It already operates extremely efficiently remotely.
All the decisions when I just toured through all our major operating sites, including our Port and Rail infrastructure and our most recent sites, Eliwana and Iron Bridge, those rapid-fire decisions which operators make, which optimize production, minimize costs, maximize safety, improve efficiency, are being made from the Hive here in Perth. Being able to operate other very large projects which have at least the same technical challenge as we have been through is already built into the Fortescue system. I am just looking forward to rolling that out as we create a fully vertically integrated renewables and resources company. I hope you find that a detailed answer to your question, Raul.
Thank you. Your next question comes from Kaan Pekker with Royal Bank of Canada. Please go ahead.
Good morning, Elizabeth, Ian, Andrew, Julie, and team. Two questions from me.
With Andrew, Julie, and the whole team online, I wanted to maybe ask my first question on FFI. I understand the need for stretch targets and ambitions, but just wanted to first talk about the initial step of FFI's hydrogen aspects or prospects. I think the first material decision was to be potentially in Tasmania sometime in 2021. Has this changed, and when can we get a better understanding of the economics? Also, wondering about a project in DRC and Afghanistan, how the risk of projects considered to be developed being assessed. I'll circle back with a second question. Thank you.
Okay. I think you just asked me about projects in the safest part of the world, say Tasmania, to the most challenging part of the world, Afghanistan. That's their fair questions. We are still working with the Tasmanian government and working closely.
We are in discussions with them around the supply of renewable electricity through their hydro and wind capacity in Tasmania, whether or not they will be the first. Six to twelve months ago, I'd have said yes. There are so many other projects which are now appearing in Fortescue's book that there will be some hot competition as to which project will be the first of the world's major green hydrogen/green ammonia projects. I'd like it still to be Tasmania. All I can say is that other projects are rapidly catching up. In terms of Afghanistan, clearly, we know the situation very well. I don't really need to answer the question more than to say in a crystalline fashion that what is already existing in our agreements with all governments are four major commitments to our investment. I would recommend this to all foreign investors.
First is countries must legislate and then enforce all forms of modern slavery out of their system. It doesn't mean you have to be perfect. I know media commentators like to make a big deal when you're not perfect. What we do know, what will bring slavery to an end is when companies like us try and when we insist that other governments absolutely do their level best as well, like we are. Sure, we make mistakes, and we will learn from those and ensure they don't happen again. Fortescue exists both in Future Industries and in the Metals Group to drive modern slavery out of the global supply chains wherever we can. That is condition one in our contract. Condition two is forced marriage.
One in less than 15 women in our planet are either suffering conditions, modern slavery, or its close relative, forced marriage and child marriage. Forced marriage and child marriage are also conditions precedent that countries agree to legislate it out and enforce it out, the abhorrent practice of forced marriage and child marriage. The fourth condition is also not ideological. It is absolutely granular. That a government must drive for equal education outcomes, not targets, not intentions, equal education outcomes for boys and girls. They are the four conditions which we invest in the country in. I certainly challenge every country we invest in, including Afghanistan, to meet those conditions.
Sure. Thank you. Just on my second question, I wanted to talk more around the reserve update.
Just looking across your operating properties, there seems to be an increase in impurities year on year across FMG's reserve space, mainly alumina and silica. So just wanted to understand why this has occurred. And secondly, how or if it will impact discounts going forward, particularly for super special fines. Thank you.
Kaan, I mean, I think the information is there. You've rightly picked up on the impurities. It's part of the natural sort of mine plan, life of mine. We're very aware of those trends. There are a number of different opportunities we have via blending opportunities, for example, to address that. It's not just simply a question of looking at that statement.
We actually work very proactively in our integrated marketing and operations team to identify any changes that might be appearing in the nature of our products, look at ways that we can, through blending and other means, actually address those changes, also work closely with our customers around product placement. We have, as you have seen with the investment in WIMS at Christmas Creek, looked at other opportunities as well for further beneficiation. It is a good indication of what we are seeing through the ore bodies, but there is a lot underway to address any of those changes, which are natural. I mean, that is what you would expect is the more that we mine, the mine plan does its job. It tells us to mine the nearest, most highly profitable and the best grade material.
Over time, as those mine plans develop, we have to invest, whether it is in beneficiation, blending, or working with our customers as well. Nothing unexpected there.
Thank you. Your next question comes from Peter O'Connor with Shaw and Partners. Please go ahead.
Good afternoon, Elizabeth. Congratulations. What a great day for you.
Thanks, Peter.
Two questions. Firstly, on the EBITDA bridge on slide 12, and secondly, on FFI spend. Just to the second one, the spend of $400 million-$600 million. Could you just walk us through how we see that flow through Fortescue's accounts, cash flow, and income statement? Is it off balance sheet, on balance sheet? Are you capitalizing it or not? Why call it out separately from slide 15? On the EBITDA bridge, you like slide 13, I like slide 12.
Is it troubling, Ian, that over 100% of the EBITDA gains in FY2021 and 2020 were price-related and 200 of volume, which is nice in million-dollar terms, but the rest were negative? Thinking ahead, I've got rising costs, and I can tag whatever view I want on price, but is that a more challenging environment in FY2022? Thank you.
Thanks, Peter. Look, maybe I'll start with the first question on the spend of AUD 400 million-AUD 600 million. I'm sure Ian can add some more color on that. We did call out, if you look at slide 39 of the pack, we've got the four sort of buckets of expenditure, which is green fleet development, domestic projects, international projects, and capital spend. It's roughly about 25% in each.
Most of that, other than the capital spend, will be operating expenditure because that is the current nature of the operations, is it cannot actually be capitalized other than that, which qualifies as capital spend. You will see that come through in other expenditure. I think on the EBITDA bridge, and I will hand to Ian in a second, that you will find on price, we actually include the increased volume in price as well. Where we have increased volume year on year, that is not just that is on last year's price, that volume bar. The actual price benefit of the increased volume is in the price bar. Just to clarify that as well. Ian, you might want to elaborate.
Yeah. I can add to that.
I think it's a beautiful thing, Peter, that we've captured all of the benefit because if you look at the major negatives, as you say, royalties go up with the iron ore price, income tax. It's a quality problem when you're making too much profit where that's a direct correlation back to the iron ore price. You've also got the impact of FX, and the Australian US dollar is largely commodity-driven. That going up 11% over the year is correlated to the iron ore price. I think we is it a concern? No, because we've captured almost 100% of the increase in revenue through a combination of and we increased our production. We did capture all the return, and we stay focused on the things we can control and keep our operating costs as low as we can.
Rocky Andrew here.
Just to also pick up on your questions, we do believe that we will lower our operating costs through going green. Rocky, we have quite a bit to play with. We have around 1 billion liters of diesel a year alone by 2030 that we'll have to expend, we'll have to burn if we do nothing. We are confident that over time, we're going to be able to show that staying with fossil fuels or going green, the fiscal decision was obvious, and we did the right thing back in 2020 and 2021 when we made those decisions, which clearly were not obvious and had a cloudy future, as evidenced by everyone not piling in after us or before us. Rocky, there is no creating green steel without green iron. The step between green steel and green iron from a carbon step is the smallest step.
From the green iron to green iron ore is the largest step, and then green iron ore itself is a very large step. We will be the only producers of green iron ore to enable our customers to start moving green as soon as they possibly can of any scale in the world. We are implementing technology testing and planning to also produce green iron, which immediately helps our customers to the tune of 60-70% of their emissions if they do not have to process iron ore to iron because we have done it for them in a completely green environment. That, of course, will drive a premium for our product. I am not going to predict what that premium will be because that would immediately set the market, Rocky.
I would like the market to set the market and not a brief answer to a foolsome question where we could obstruct the future of this company, i.e., loose lips, Rocky sink ships. However, I would go on to say that the production of hydrogen and green hydrogen and green ammonia itself is expected to be a profitable experience. We are having talks with our customers. Many of the same customers have said, "Save us that massive hit to our carbon budget by doing it yourselves and shipping us the product." They are saying that they need our green hydrogen. They need our green ammonia as soon as we can possibly produce it in scale.
We're not talking about blue hydrogen or fossil fuel hydrogen, which researchers and academics are beginning to question whether or not there's any point in ever making hydrogen from fossil fuel because you create more carbon in that process than you ever save in the hydrogen. Our customers are saying we need it to be green, and we will be prepared to pay for that. Now, I'll bring you back to the last point. If we're acquiring projects at well less than, say, $5 a megawatt for the project itself, and we have to take that project through to final investment decision, which means all the matters of law, climate, technology, capital, operating cost, everything gets established. Then we're looking at $200,000 a megawatt if you just look at comparative values around the world. This is before you even take into account a massive green premium.
This is just what they're worth. So when analysts do question us why we're doing what we're doing and is this just an ideological bent, look behind the hard numbers. Look behind the massive scale and look behind the fact that Fortescue is a business and will continue to make very business-like decisions.
Thank you. Your next question comes from Hayden Bairstow with Macquarie. Please go ahead.
Yeah. Afternoon, all. Just a couple for me. Firstly, just on the market on iron ore, I mean, there's obviously a lot of volatility and everything at the moment, premiums and discounts, etc., and different products. Just interested to see what the feedback you've had from steel mills. I mean, there's obviously pressure in China about limiting volumes into the second half of the year.
Seeing that when you forward order book and just any comments on sort of shorter-term moves that we've seen in the iron ore price.
Yeah. Thanks, Hayden. Look, I think there's no doubt, obviously, iron ore prices have moderated from the record highs. In recent weeks, we have seen that price correction. We think that's influenced by some weaker than expected macroeconomic data in China, as well as the implementation on curbs on crude steel production. We think there's also been some transitory factors that have influenced that. The weather disruptions, the COVID outbreak, and most of those we see will dissipate over the coming months. We're expecting a seasonal rebound in steel demand for the fourth quarter of 2021, particularly in the construction sector.
While we're seeing some volatility, we think the outlook is certainly not that crude steel production will be. It's up 8% to the end of July. We don't necessarily expect that that will be the full-year growth rate, but we do think crude steel production will be up year on year. Hard to predict exactly what. There is still constrained supply. We're seeing strong ongoing demand. Steel exports are remaining at pretty robust levels. We haven't seen a reduction in steel exports. Overall, we're still seeing the same market environment, which is some volatility in recent times. Overall, we expect to see some strong rebound in the fourth quarter of this year.
Okay. Great. Just back on the FFI, I guess we're all sort of trying to put numbers around this.
We're just interested to understand when we've seen the diesel numbers rising over time and there's a diesel rebate, so we can sort of calculate the value of that. But instead of removing diesel, you think the primary cost benefit for the business, or do you see other material costs, I mean, other than, I guess, carbon tax type sort of policies coming in? Is there other parts of the business and the operating base that are going to suffer from a cost increase over time if you're on a do-nothing sort of basis compared to what you're planning to do?
I'm sure Andrew or Julie want to come in as well. I would say that this is not just about the reduction in energy costs. We're also seeing this investment in technology is giving further opportunities for automation.
We're actually seeing a step change overall in terms of investment in technology and innovation. We've already seen the benefit of our autonomous haulage fleet. There is no better case in point, I think, than the rollout of autonomy at Fortescue, which has contributed not only to safety benefits but also to our industry-leading cost position. All of the investments that we're making, we think, will actually contribute not only to reduction in energy costs and will mitigate what could be the introduction of new costs, like a carbon charge, for example, or the removal of a diesel fuel rebate. There's a mitigation aspect to it. We think the opportunities for technology to further enhance our autonomy and innovation will contribute to a lower cost position. Julie or Andrew?
Yeah.
Look, I'd like to throw it to Julie and then Michael and Ian to make a couple of comments. Starting with you, Julie.
It's Julie here. I'd like to further add that as we learn through our growing projects, as we decarbonize Fortescue, those learnings and the increased scale will contribute to all our other projects, not only in Australia but globally, as we build up those green hydrogen and green ammonia production facilities around the world.
It's Michael. On the decarbonization of the Pilbara operations, there are very significant operating cost savings from both diesel elimination and also gas elimination. The bigger gains will be in the premium for the product.
We're not going to set it or judge it now, but take a small dollar per tonne number as a premium for being the only green iron ore producer in the world and translate that through into steel markets and other markets. You get a very significant positive EBITDA contribution. On the portfolio, the portfolio will be transformed over the next 12-18 months to significantly higher dollar per megawatt values. That's going to add a huge asset base to Fortescue Metals Group.
Just to quantify it, our fuel costs are about 25% of our existing business. Proportionately, that would increase. There is probably another 5-10% indirect costs that also flow through. That's material.
When Andrew spoke about going to otherwise a billion liters from the set around 700, clearly energy costs as a percentage of our cost base, even at 25%, but then plus plus. Then you have the diesel fuel rebate that is currently keeping our costs lower by a factor of about 30%.
Hayden, they are substantial, Andrew Forrest. Look, I have built a career on identifying great sources of commodity, matching it wherever I can to innovative but non-contentious technology. I can show you all the way back to the Murrin Murrin days of having done that and then matching that again to off-takers. The renewable energy space seems to be missed by a lot of people when you break it down into those steps. If you look at the renewable energy space, our off-takers are huge. They are the biggest off-take volume I have ever seen.
It's literally the world's energy, which will all go green. There are many people who are leading, many countries and companies who are leading. At the end of the day, the world is going green. That market is enormous, Hayden. We've engaged with at least 20 different companies who want our product. We are matching it with non-contentious but innovative technologies. I've spoken about the technologies we've already acquired. I've wondered about the massive breakthroughs which Fortescue's made in such a short time, having not happened before. The answer, Hayden, is it hasn't happened before because community expectations didn't award it or encourage it, or in many cases, actively discouraged it, nor was there government leadership for it to happen. I'm not just talking Australian government leadership, but global.
We now have global government leadership, and we have a very strong society will to go green. Of course, Hayden, the one which really answers your question is that the commodity itself is free. It is the most ridiculous copper, gold, iron ore deposit I have ever seen. It has no overburden. Therefore, no strip ratios. It comes in at the grade you want, and it goes on forever. Oh, and it costs nothing. While we have to get through a capital cost and an electronic and chemical operating cost, which is a fraction of anything I have ever seen in the mining industry, once we are going, our own operating costs become extremely competitive against any sector. That is, of course, a major driver for the future profitability of Fortescue.
Thank you. Your next question comes from Lyndon Fagan with JPMorgan . Please go ahead. Thanks very much.
My questions are directed to Andrew. I have one on green ammonia and green hydrogen. With relation to those projects, when we have tried to model them, the capital intensity is a lot higher than traditional ammonia and hydrogen projects. Therefore, you need to get a substantial green premium on the other side to generate an acceptable return. I am just wondering if you can maybe provide a bit more of an update on the projects, how they are looking, and how you actually monetize the story that you have been talking about, which is very, very compelling. I guess on paper, it is still hard at this end to try and make the numbers stack up. I guess the next question is on green iron. You have mentioned that a few times in the presentation today. Where is that up to?
At the start of the year when we caught up, you were talking about a flow sheet that had been developed at low temperature and working with the CSIRO. I'm just interested to know whether it's shaping up well or whether there still needs to be a lot more trials and when perhaps we can get a bit more information into the market on that. Thanks.
Thank you, Lyndon. Let me just look at costs. Once rolling, operating costs should be very competitive for the reasons which I just gave, Lyndon, and because commodity is basically free and infinite. It's the beauty of renewables. The capital cost gets taken into account. That is where we're spending most of our attention.
Electrolysers are one part, but a very serious important part and a typical part of what we're seeing in the technology revolution of the green energy and green hydrogen space. Electrolysers were being quoted to us by Europe only last year, Lyndon, at EUR 1.1 million-EUR 1.2 million per megawatt. We're now being quoted EUR 200,000-EUR 250,000. That's a saving of AUD 800,000 - AUD 900,000 a megawatt, AUD 8 - AUD 9 billion. You have really big numbers here, which are falling CapEx impact on attractive operating costs. The CapEx is the one which we're challenging most. Yes, the initial projects, welcome to Fortescue, Cloud Break, 2006, 2008, was much more expensive. We would still be making a great profit now. Back then, it was a tough new project for us and had an operating cost of $58.
Now the group has an operating cost in the mid to early teens, as you know. We all look very clever. Even at the time, Lyndon, our shareholders experienced very major capital growth. We have given you some of the reasons, including going from AUD 5,000 value to AUD 200,000 value per megawatt with green energy. As you know, we are measuring our green energy in not only gigawatts or tens of gigawatts, but hundreds of gigawatts, which we are capturing around the world to turn into green hydrogen and green energy. That scale, Lyndon, will have exactly the same impact. Some people have said, "No, it will not with hydrogen." I would just say, really, do not stand in the road of history. Do not stand in the road of certainty. It will happen with every industry like it has happened with every industry.
Thank you.
Your next question comes from Robert Stein with CLSA. Please go ahead.
Hi, Andrew and Elizabeth and team. Two questions on FFI. The first one's on strategy and the other on monetisation, which sort of comes off the back of the previous question. Re-strategy, on the last call, I asked a question around nickel acquisitions, i.e., Noront, that was being progressed through Wyloo. Given that Dr. Forrest is on the call today, I might ask it again. Why isn't FFI playing a lot closer to its core minerals development operational skill set and targeting nickel acquisitions like Noront, Western Areas through the FMG banner? Some may say it's also aligned to low carbon future and is potentially more aligned to existing invested mandates and offers potential exploration development synergies.
The second one on monetisation, look, I think given the previous catch-up that we had about six months ago, we talked about sort of 8-10% IRRs at the project level and then gearing up through green bonds that were non-recourse to FMG, sort of increasing the equity IRRs. Can you give us an indication of any appetite from green bond investors to these opportunities and how they can see that heightened country risk with some of the jurisdictions that have been highlighted, obviously being at the riskier end of the scale?
Okay. By the time we got to the end of the last question, I have forgotten the start of the first question. Yeah. Sorry, Laura. Thank you. Got it. Got it. Got it. It is a good time to go public on this.
Between Tattarang and Fortescue, Fortescue shareholder Tattarang, there's a Fortescue First principle, which means every opportunity which may have an interest to Fortescue is offered to Fortescue First. There are periods of time which are substantial for Fortescue to consider whether or not it will consider the opportunity and then take over the opportunity or over another period of time hand the opportunity back to Tattarang. The same happened with Noront. The issue with Noront for Fortescue is that to move the dial, Fortescue needs very considerable scale. At the early stages of looking at the Ring of Fire, it did not provide Fortescue with the scale it needed to get heavily into nickel. Now, if there are massive nickel discoveries made, then sure, it might have. At this stage, that's a very well-drilled out area and seemed to be very geologically understood.
The nickel upside appeared limited to Fortescue. I did not make any of those decisions. That was made independent of me. It has been explained to me since.
The second was monetization and geography risk.
Geography risk, we consider that high-risk geographies have a much lower value per potential megawatt than very predictable economies. That is how we still do it. To say we are only going to develop in the Western world would be a travesty because there is immense renewable energy in the developing world. They will stand to benefit probably the most on a standard of living improvement indicator, the most of all people in the world through the advent of green energy and particularly green hydrogen. We are seen to be very early first movers.
Please do not forget that while we have a vast portfolio in developing countries, we also have a vast portfolio in developed countries. In terms of monetisation, think of it like Fortescue. Everyone said to me, which you might not be, but you are seeming to go down that road, "How are we going to monetise this? How are we going to sell it?" I was always asked about 45,000 times, "When was I going to sell my shares or a project, etc.?" I said boringly back then that we would not stop until we felt we had created one of the world's first high-growth and high-yield companies. Now, you can see that the management team of Fortescue has absolutely shot the lights out with that. They have created a high-growth, high-yield company, very high-yield company. The reward for shareholders, if you like, the monetisation to shareholders is dividends.
When I used to have the argument, "Yeah, well, dividends are a very poor way to access companies' profits," etc., you found that with Fortescue, it's been very efficient. There's been a generous dividend and a highly disciplined dividend policy. I see no reason for that to change when it comes to accessing into what will be the largest industry in the world, and that's the renewable sector. The monetisation will be dividends.
Thank you. Your next question comes from David Coates with Bell Potter Securities. Please go ahead.
Thank you. Good afternoon, Dr. Forrest, Elizabeth, and Julie and team. Great to have you all on the call. Congratulations on a, yeah, awesome set of results. One question on FFI and then a more mundane, perhaps, question on the market. FFI hydrogen seems to have emerged as the key focus.
Can you just run us through, and it's technology that's been investigated for a long time. What are the key hurdles that FFI has overcome in engineering and constructing the hydrogen fuel cell haul truck? Is commercialisation of that the next step? I'll come to a second question in a minute.
Okay. Thank you. There's about 17 questions in that, David. Let me run you through your one question.
Look, hydrogen has emerged not because it's hydrogen, but rather green hydrogen, where we're beginning to see what we've always thought, which is industries, industrial studies, and academic studies, which are beginning to point out if you take the total amount of emissions from producing blue or any other fossil fuel hydrogen, including, of course, fugitive emissions, which the industry likes not to count but is massive, then you're really no better off, if not worse off, than just burning the coal or the gas or the oil or whatever it is in terms of limiting carbon.
It appears to us that as the world begins to more fully understand that the work simply has not been done by the oil and gas sector to make any claim about their hydrogen being "clean," and that fugitive emissions, like other emissions, are not measured in their petitions for funding to government, green hydrogen is becoming more and more the go-to source for the world as the world's only fully green, zero-carbon in the supply chain renewable energy source and renewable product source. We are focusing very much on that.
In terms of the technical challenges of getting a haul truck to work and getting it uptaken commercially?
Yeah. Look, I was deliberately quiet on that. There were some solid technical breakthroughs.
I'm not going to extrapolate on them in public, but they were significant and fully in line, though, with the track record of Fortescue since 2003.
I guess from a financial point of view, the best way to think about it. Michael Masterman. From a financial point of view, the best way to think about it is this. Electric drive trucks are now significantly less in terms of, if you exclude the engine, significantly less than a standard non-electric drive truck. We're already there in terms of the drives. We're already there in terms of the chassis and the dumper. Where the big savings come from is being able to drive battery electric, which will be half, roughly, and fuel cell electric below the cost of an internal combustion engine.
Through a combination of technologies in the United States, internally designed within our operations at Hazelmere, we're very much on the track to doing that. As soon as a battery electric haul truck plus a fuel cell electric truck is below the cost of a replacement internal combustion engine truck, you've suddenly got a way to take your entire fleet green with only either hydrogen or green electricity as the source of fuel. That is what allows you to drop that bigger litre of fuel in your iron ore operations. That is what delivers the significant savings. It is the set of technologies necessary to be able to completely replace an internal combustion engine in a haul truck with a combination of the fuel cells and power electronics and the battery systems.
Okay. Over to you, mate.
Thank you. Your next question comes from Paul Young with Goldman Sachs.
Please go ahead.
Good afternoon, Andrew and Elizabeth. Andrew, I have a few further questions on FFI. First, I guess, just to make an observation about your 15 million-tonne per annum target by 2030. It is ambitious. I'll give you that. You have done that before. Certainly from a technology standpoint, you have got a proven track record. I guess I'm struggling a little bit with the economics, though, at least on paper. I guess we all understand the need to decarbonise, along with the fact that we understand that OPEX and CAPEX is coming down potentially for green projects. Can you help me out with respect to the price of green hydrogen and how you think about per kilo, the advantages of having scale and being a first mover? How do you think about how the price develops over the next decade?
Okay.
I think we're all making a mistake globally. We just compare one fuel source to another fuel source, which the world wants to, which the world doesn't want. Actually, one's got to compete with the other. I'd just say, actually, it doesn't. When we're invited by the Port of Rotterdam to start a green hydrogen index or a hydrogen index, we've been very careful about it. We've said, "No, we'll only start a green hydrogen index, a zero-carbon in the supply chain index," because we're getting very different demand signals from a litre of energy from hydrogen or diesel or oil and gas, green hydrogen, that is. I think we need to just let the market work that out. What I can tell you, it's not looking like a fossil fuel kilojoule of energy. It's looking entirely different. Why? That's obvious.
It's a different product. Oh, and by the way, it doesn't cook the planet. It's also really efficient. Once you've got it into your system, green ammonia is a beautiful slow-burn fuel. Once you've got hydrogen into your system, you've got a very efficient source of energy. I just want to put that out there. Continuously comparing green hydrogen to oil and gas is like comparing an apple to a horse. It's just pretty irrelevant. Secondly, I'd say in terms of the capital cost, yes, there is a reason why green hydrogen hasn't taken off. It's because the capital cost is too high. If you go the Haber-Bosch process to a AUD 1.2 million megawatt electrolyzer to all the stock standard stuff we already know, you're going to get the same result.
That's why Fortescue's entire value system is on encouraging and driving change because without it, there can be no improvement. We are seeing capital costs falling. Will our first project be $12-$15 a relative tonne? No. Will our first project be profitable at a lot higher dollars per tonne? Yes. I am not going to call exactly what that is. I have to say really clearly, technology in this space is changing super fast. It has never been scaled. It is being scaled now. A green hydrogen fuel cell truck was never even invented until 145 days ago. All this space is changing. We are finding immense value in the emergent technologies, and it is giving us confidence to continue to send Fortescue green and to produce the green energy the world needs.
We also did not touch on green iron, which does have a process flowsheet which operates at a little hotter than your cup of coffee and produces very high-grade material. Are we going to opine immediately that that is a fully commercial process? No, we are not. Are we going to tell you that it has been proved? Yes, we are. We are looking at scaling that technology as quickly as possible. Because it runs on low temperature, that is the reason why it can run on renewable electricity. If we can adjust technologies to renewables and not renewables to technology, we will have an automatic breakthrough. Now, if we look at making green iron at the same temperatures as it is done commercially for now, or indeed the Boston Metals are between 1,800 degrees Celsius or 3,000, we are not going to be able to use renewables because renewables can stop.
But if we can make it at around 100 degrees, now we have a process which can easily be matched to renewable intermittent energy without any further cost. So these are the breakthroughs, sir, which are happening as we speak.
Thank you. Your next question is a follow-up from Lyndon Fagan with JPMorgan . Please go ahead.
Thanks a lot. You just answered the green iron question that I was planning to ask about. But I guess while I've got the floor, Andrew, I think still a lot of us are struggling to generate strong returns from these projects. And it's such a compelling story that you've outlined, and you can't deny the world will need to decarbonise. But how do we get a return for shareholders along the way before, I guess, the change has fully been implemented in the coming decades?
I guess also the sequencing of projects. There's been a lot talked about in the press, and I guess more recently an opportunity in Indonesia that Bloomberg reported on. There was a AUD 12 billion contribution proposed from Fortescue, which I imagine you would use some debt funding with. How do we think about the sequencing of projects in terms of all the opportunities that have been outlined to date? Looks as though the Tassie green ammonia could be first, but I'd love to know what might be number two or three on the list in that case.
Yeah. Okay. Thank you. What governments say to get themselves re-elected is up to governments. As you noticed, we didn't say it.
What I can say is if you're looking at a quick and easy way to value uplift, just look at the fact that if we're acquiring projects for less than AUD 5,000 a megawatt hour, which we are, it's almost free apart from a bit of skin on the road. And then you can value that up to AUD 200,000 per megawatt hour, even for a green premium, then you've got a massive uplift 20 times. I would like you to think through that lens. I would also like you to think through the lens that if we're making green iron ore, will customers want to pay for that when they're getting hammered by their own owners to go green? Or will they want to take an even quicker shortcut and pay even more for it with green iron? The answer to both of those is yes.
I was going through an old presentation this morning early last year, and I said, "The answers will become abundantly clear by 2025." I was wrong. The answer is going to become abundantly clear by 2022, 2023. This world is changing fast. Just those uplift numbers, when you look at, say, discovering an iron ore project at a pre-feasibility level or a pre-inferred resource level, and you take it up to indicator, then you take it up to measured, you get massive value uplift. That value uplift is not as extreme as what I'm outlining to you between AUD 5,000 a megawatt and AUD 200,000 a megawatt.
Thanks.
Thank you. Your next question is a follow-up from Robert Stein with CLSA. Please go ahead. Hi.
Just to follow up to the green bond aspect of the question before, can you sort of, because these financial markets, I guess, may be a little bit different to what some are used to. Can you just give us a feeling for what the investor appetite is in the green bond space for these projects and the types of, I guess, premiums that are on offer or discounts, depending on which way you think about it in terms of the rates of interest?
Yeah. Look, the only heat I've had is not bringing these green projects to the market quickly enough. It is not an underestimate to say there are trillions of dollars of available capital. It will not just appear in green bonds. That is a road to capitalisation, but it is not the only road. Fortescue does not always take the very clear road.
What I can say is the appetite, if that's what you're asking, to finance these projects is immense. I've been on the road for eight months of the last 12. I'm about to go out on the road again. I've been joined by the Head of Hydrogen, Head of Finance, Chief Executive. We are very aware that the capital to develop these projects is there. That's why I've said at the start, 10% of NPAT is the right number.
Thank you. Your next question is a follow-up from Kaan Pekker with Royal Bank of Canada. Please go ahead.
Thanks for taking my questions. Just a quick follow-up on the monetisation by dividend from FFI. Just in terms of timeframe, is this post-2030? Just secondly, we've seen the European oil majors push pretty aggressively into the renewable space.
A few of them have considered partial sell downs or rolling up minority equity shares of their green business arms or IPOing them to accelerate growth in the business. Is this the path forward for FFI as well? Thanks.
Thank you. Look, it took us eight years to start Fortescue and then go to dividends. In that time, shareholders enjoyed the most massive growth. We are still easily Australia's highest return to shareholders over 20 years that this country has seen by many times. That growth I've never seen before since iron ore to now. The renewable energy sector I see as offering that growth. Monetisation, would we follow the oil and gas companies who are seeing great value in their green energy projects so they're going to sell them down to prop up their fossil fuel business?
Yeah, I can see why they'd do that. Will we have to do that? I will let you know. But we have many ways to skin a cat.
Thank you. Your next question is a follow-up from Paul Young with Goldman Sachs. Please go ahead.
Thanks again. Andrew, I'll ask a similar question on funding and maybe another way. Just also before I ask, just an observation. I know you gave a presentation to the Clean Energy Council Summit a couple of weeks back where you mentioned that FFI has AUD 1.1 billion of cash, actually over AUD 1.1 billion and no debt. I presume that's prior to the allocation of the 10% NPAT from the June half. But where will you go, Andrew, for external financing?
I'll let you know.
At this stage, I think that, the only point I need to make is that we're more than adequately capitalized for our objectives to be able to drive through what we're really good at, which is the discovery of proving out the feasibility and then implementation of projects which get you that 20 times kick I've referred to three times in this call, AUD 5,000 to AUD 200,000. That's what we will do.
And just to clarify as well, the AUD 1.1 billion is the 10% of FY21 NPAT from when we actually declared that policy.
Thank you. There are no further questions at this time. I'll now hand back to Ms. Gaines for closing remarks.
Thank you, Melanie. And thanks, everybody, for joining us today. Great opportunity, I think, to hear about the vision for FFI, but also to celebrate and recognize outstanding performance for FY21.
As I mentioned earlier, we had a strong start to FY22, and we're very focused on delivering on all of our key objectives. Thank you. Look forward to speaking to you all soon.