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Fortescue Metals Group Ltd (ASX: FMG) shares are trading 1.5% higher today at $24.43 apiece.
The gain comes today despite allegations of intellectual property theft involving its green iron technology. The ASX miner has accused two former executives of misusing confidential information to benefit a rival company, Element Zero.
Investors aren’t deterred by the news by lunchtime Friday. Let’s take a closer look.
Why are Fortescue shares in focus?
Fortescue claims a former chief scientist and senior executive took proprietary information when they left the company in late 2021.
According to reporting from The Australian, the mining giant executed secret raids on the homes and offices of these individuals under court-approved search orders.
Fortescue alleges the former executives used this information to start Element Zero, a competitor in green iron technology. This was an “industrial pilot plant for an electrochemical reduction process”, according to Federal Court Judge John Logan.
These actions represented an “industrial-scale misuse” of its intellectual property, particularly concerning its electrochemical reduction process for carbon-free iron, according to reporting in the Sydney Morning Herald.
Element Zero’s response
Element Zero has denied the allegations, calling them “spurious” and “entirely without merit”. The company plans to apply to set aside the original search orders.
“As Element Zero will demonstrate, its green metals technology was developed independently of and is very different from anything that Fortescue is doing or has done in this space”, the company responded in SMH.
The company continues to advance its technology and plans to build a $3.2 billion green iron ore processing plant in the Pilbara.
Justice Logan noted no final determinations. As to what this means for Fortescue shares long term, only time will tell.
Fortescue’s strategic moves
Despite the legal battle, Fortescue is pushing forward with its green initiatives. In May, the company started its first negotiations to supply 100 million tonnes of green iron to China from its assets in the Pilbara.
This follows a $50 million investment in a pilot plant that, according to The Australian, would produce 1,500 tonnes of green iron annually by 2025.
“Dr Forrest has spruiked his ambitious goal of producing 200 million tonnes a year of carbon-free iron ore for export to the company’s customers”, the reporting said.
Fortescue shares summary
Fortescue shares have had a difficult time in 2024, trading more than 16% in the red since January. However, they have held onto a 21% gain over the 12 months. At the time of writing, they trade on a price-to-earnings (P/E) ratio of 8.6.