Article by Brittney Levinson and Mark Wembridge, courtesy of The Australian Financial Review
06.02.2026
Less than two years ago, shiny new robotic arms whirred on an automated assembly line and politicians clamoured to be seen at the high-tech warehouse on the fringes of Gladstone where a government collaboration with billionaire Andrew Forrest was meant to kick-start a green hydrogen industry in Australia.
Today, the robots lie dormant, the warehouse is empty except for a skeleton staff and the Queensland governments is fighting with Forrest’s Fortescue Metals Group over $66 million in subsidies that were awarded to a project from which the company has now walked away.
The green dream of building a factory that would pump out machines that split water into oxygen and hydrogen to be used as fuel in steelmaking or other industrial processes looks more like a white elephant.
Fortescue had promised to produce more than 2000 electrolyser stacks a year in the facility, a 15,000-square-metre, open-plan warehouse in the middle of a barren industrial estate in the central Queensland port city.
The Gladstone building opened to much fanfare in April 2024 – with former federal industry and science minister Ed Husic and then-Queensland Labor premier Steven Miles present – and was touted to be at the forefront of a “renewable energy superpower revolution”. Its robot-driven assembly proceeded to testing stage.
But the “world-leading” facility, and its huge carpark, now sits practically empty after Forrest’s green dream for Central Queensland came to an abrupt halt last year.
The facility’s future hangs in the balance while a legal battle between Fortescue and the Queensland government plays out over $66 million the company owes the state. Fortescue has struck a deal with the federal government for repaying most of an additional $33 million it received from the Commonwealth.
The project, designed to produce emissions-free hydrogen at scale, was unceremoniously killed off last May as part of Fortescue’s pullback from a swath of green projects.
Forrest has become a global spokesman for green technology, spruiking the adoption of electric mining vehicles, ammonia-powered ships and battery technology.
At the same time, Fortescue is one of Australia’s biggest corporate polluters with its mining operations burning 1 billion litres of diesel annually, but has an ambition to eliminate emissions from its mining operations by 2030.
Green hydrogen pullback
Last year, Fortescue walked away from several green projects, axing hundreds of manufacturing jobs at its UK-based green technology venture Fortescue Zero and scrapping its $US550 million, 80-megawatt hydrogen project in the US state of Arizona. The two closures cost shareholders $US150 million in Fortescue’s latest full-year results.
The Gladstone project was supported by a $33 million federal government grant that has been partially repaid and $66 million from the then-Labor Queensland government.
The state’s contribution included the provision of an electrical sub-station, road network, communications, local water connection and the allocation of land.
These components are central to the negotiations between Fortescue and the state, which remains adamant it can recoup the costs in full.
In August, Deputy Premier and Infrastructure Minister Jarrod Bleijie told parliament he would try to recover the funds and blasted the former state government for investing in a “vanity project”.
“I have directed my department to advise Fortescue that the Crisafulli government will issue a notice to comply and a default notice and seek full reimbursement of the $65.97 million that went towards this now discontinued project,” Bleijie said.
“That is value for taxpayers’ money, and we are going to try to get it back.”
Fortescue, however, is unlikely to agree to pay back the entire amount, given it has built and delivered the facility and spent a portion of the funds on employment and local contractors.
Alternative uses
The reality is probably a deal similar to the one Fortescue struck with the Commonwealth, to pay back $20.255 million of its $33 million grant.
There appears to be no deadline for the parties to reach an agreement, but Queensland could consider legal action if negotiations continue to stall.
The original lofty goals for the facility may have tumbled, but what is left is still a “tremendous asset” that is not a write-off, says Paul Hodgson, executive director at Central Queensland University’s Hydrogen Renewables Centre, who toured the facility around the time of its launch.
He described the building as a “blank space” with the potential to be repurposed, particularly for training, research piloting or as a shared laboratory space.
“It’s got a big footprint, it’s well located, and it would be good to see it used,” Hodgson said. “I think that everyone in the region would love to see it [become] a thriving, dynamic place.”
A Fortescue spokesman said it was exploring multiple options for the Gladstone facility, into which it had invested $228 million of its own funds.
“Fortescue continues to explore multiple options to ensure our investment and the $66 million contribution from the Queensland government is well utilised into the future,” the spokesman said.
As part of that process, discussions were underway with the Queensland government about the requirements of its grant agreement.
“Fortescue continues to act in good faith and remains engaged in constructive, in-confidence discussions with the Queensland government.”
Bleijie said negotiations were ongoing, but reiterated that the government expected proponents to “pay back what they owe when they don’t deliver”.
While Fortescue has shuttered its Gladstone project, the world’s fourth-biggest iron ore exporter has not abandoned all its green projects. Last month it pushed ahead with construction of 17 electricity turbines at its 133 megawatt wind farm in the Pilbara.
It is also working to develop a green hydrogen project in the Brazilian port of Pecem, with a target of producing 168,000 tonnes of the fuel annually.