Billionaire Andrew Forrest’s flagship green hydrogen factory cost Australian taxpayers $80 million while his company spruiked its “successes” to foreign investors, only to abandon the project months later.
New documents highlight a sharp disconnect between the mining magnate’s optimistic projections of his prospects for producing emissions-free hydrogen in Australia at scale and the major commercial hurdles that stand in the way of such projects becoming viable, even with massive taxpayer subsidies.
Fortescue Metals Group, the ASX-listed iron ore miner founded and chaired by Forrest, has repaid $20 million of the $100 million dispersed by state and federal governments for the failed project, but is still being pursued for $66 million by the Queensland government, which has labelled it a “vanity project”.
The documents also reveal representatives from the Moroccan OCP Group visited the Gladstone hydrogen electrolyser in December 2024, six months after OCP board member and Moroccan energy minister Leila Benali and Forrest were reportedly photographed kissing in Paris. Benali denied any “connection to the person in the photo”. Delegations from CS Energy and Santos also visited the site.
The Moroccan Competition Council approved a joint venture between OCP and Fortescue to establish four major projects in Morocco in April 2024 after the federal and Queensland governments pledged $137 million for the Gladstone hydrogen technology plant in 2023. Fortescue contributed $228 million to the project.
But the Australian plant was suddenly mothballed in May 2025, just months after Fortescue said the project had reached all of its milestones and was testing hydrogen electrolysers, which it had vowed would create a “new export industry for Australia”.
The documents, released under freedom of information laws, show that after the government-funded construction, the plant tested hydrogen electrolysers for just seven weeks, costing taxpayers an estimated $14 million for each week it was operational.
Green hydrogen technology is central to Forrest’s push to diversify Fortescue’s mining-dominated business into products needed to decarbonise the economy, with plans to produce the emissions-free fuel source in Australia, Brazil, Norway and Morocco. Hydrogen electrolysers split water into hydrogen and oxygen, allowing the hydrogen to be extracted emissions-free if powered by renewable energy. In theory, green hydrogen could be used to replace coal, gas and oil in industries that generate high levels of fossil-fuel pollution, such as steel production or heavy transport.
Industry Minister Tim Ayres said in September he would pursue the company for the public money that went into the project.
“Under the terms of this grant, the grantee is required to use project assets funded by the grant for a designated purpose, to ensure those assets are not left unused, used for any other purpose or otherwise disposed of during a designated period,” he said.
A Department of Industry spokesperson confirmed Fortescue repaid $20 million of the $33 million dispersed from the original federal government grant in November.
“Part of the project involved building a hydrogen electrolyser manufacturing facility. This facility was built and delivered by Fortescue,” the spokesperson said.
“There was also significant eligible expenditure on labour and supplies throughout construction.”
But the Queensland government is still chasing $66 million in taxpayer funding that it paid to the company. The company recorded $5 billion in profits last financial year – the same amount it paid in Australian taxes and royalties – and has $17 billion in investments under way in Queensland.
Deputy Premier Jarrod Bleijie demanded Fortescue repay the taxpayer funding in August, describing the Gladstone site as a “vanity project” and a “terrible deal”.
Fortescue’s chief executive, Dino Otranto, said Fortescue was taking a risk attempting to build a new industry from scratch. The company spent $38 million on infrastructure, local labour and supplies from the grant.
“We shouldn’t expect those who take on the challenge of building something new to go at it alone – it’s a co-investment in Australia’s economic growth,” said Otranto.
The documents also show Fortescue scrambling to locate Forrest as it attempted to arrange a call with Queensland Liberal Premier David Crisafulli following Queensland’s decision to launch legal action.
Forrest told Crisafulli he was reassured that the state government would “maintain a constructive and positive relationship” with his companies despite Fortescue announcing it would shut down the plant and lay off 90 workers.
“I remain strongly committed to supporting the state of Queensland and was encouraged by your assurances regarding your government’s intention to maintain a constructive and positive relationship with the entities I lead,” Forrest wrote to Crisafulli in September.
“I appreciate you making time Andrew,” Crisafulli responded. “Please keep in touch. DC”
But relations between the Queensland government and Fortescue have since soured.
Bleijie, the deputy premier, said the Queensland government was still negotiating to recover “tens of millions of taxpayer dollars that were poured into this dud project” and blamed the former Labor state government for approving it.
“Unlike Labor, the Crisafulli government respects Queenslanders’ money and we expect proponents to pay back what they owe when they don’t deliver.”
Otranto said the government decided where to invest taxpayers’ money. “The reality is not every investment delivers immediately, and there are setbacks,” he said.
“What matters is backing those with the ambition to try and the track record of delivering real value for the nation.”
A Fortescue spokesperson said the company hoped to resolve the situation as soon as possible.
Touted by Fortescue as the future of energy, green hydrogen has been beset by hurdles, driven by the high cost of production, and a lack of delivery infrastructure and guaranteed supply.
Foreign, federal and state governments have been pouring billions of dollars into becoming a leading supplier of green hydrogen.
However, major barriers to the technology’s viability remain, the biggest of which is that it still costs much more to make than hydrogen produced from fossil fuels, and not enough customers are yet willing to pay the green premium.
“It’s a long way from being the magical fuel that was going to fuel everything,” said Alison Reeve, the energy director at the Grattan Institute, an independent think tank.
“Electricity is better, is the short answer. Electricity is more efficient. So to run a truck on hydrogen, for example, you turn green electricity into green hydrogen, and then you put that in what’s called a fuel cell, and you turn it back into electricity to run the truck, and you lose a chunk of the energy at each stage of that process.”
Fortescue has abandoned its goal to produce 15 million tonnes of green hydrogen a year by 2030 and shuttered Gladstone and a US plant in Arizona in May, laying the blame on the Trump administration for pausing grant payments, and uncertain market conditions. However, the company says it is “not giving up” and maintains that green hydrogen will be an essential fuel in a greener world.
Forrest, who has previously described green hydrogen sceptics as “muppets”, told world leaders at Davos last week that he had plans for a cheaper “new form of hydrogen”, but said he was not yet in a position to discuss it publicly.
The company has received more than $343 million in funding from the European Union for the Holmaneset Project in Norway, and says it is investing in the $5 billion Pecem project in Brazil.
Reeve said the industry would remain dependent on public subsidies.
“Every new technology development that we have, regardless of what field we’re talking about, has had some level of taxpayer-funded research at the early stage, and probably taxpayer-funded early commercialisation as well,” she said.
“Hydrogen is not going to be any different, and that’s because there are lots of risks at that stage that stuff won’t work, and the private sector is not going to take those risks by themselves.”
Forrest told Davos that his company was not filled with “senseless greenies”.
“We’re hard-edged businesspeople with an understanding of the planet,” he said, declaring that Fortescue’s iron ore operations would have real-zero emissions by the end of the decade by removing diesel trucks and firming its power with batteries.
“I’d just say this to the world, renewable energy on a 24/7 base load basis, to be proved by my company within three years,” he said.
While Forrest was in Davos, Benali was in Saudi Arabia at a mining ministers’ meeting, where she pitched Morocco “as a green corridor connecting West Africa to the rest of the world.”
The photograph of Forrest and Benali reportedly kissing threw the spotlight on the pair a year after the billionaire split with his wife of 31 years, Nicola.
Benali’s Ministry of Energy described the publication of the “Paris kiss” photograph by The Daily Mail and The Australian as offensive and claimed it was part of a campaign to defame her.
“It is a form of revenge and targeting by interest groups on the grounds of its failure to achieve certain gains and objectives,” she said in a statement in 2024.
Forrest and Benali did not respond to requests for comment about their personal lives.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Eryk Bagshaw is an investigative reporter for The Sydney Morning Herald and The Age.He was previously North Asia correspondent. Reach him securely on Signal @bagshawe.01Connect via X or email.
Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via X or email.
