Tasmanians expressed doubts about AI firm Firmus, now so have investors

Firmus Technologies has been the talk of the town after it was forced on Friday to pull the pin on its highly anticipated debut on the Australian Securities Exchange due to lacklustre demand.

At the start of the year, not many people knew about the company quietly building an AI data centre in Launceston, in northern Tasmania.

Fast forward to June, Tasmania's energy minister, after questions in parliament, revealed Firmus wanted to build two more AI data centres in Tasmania.

A firestorm of anti-AI data centre sentiment erupts in the community and suddenly every Tasmanian has something to say about Firmus. 

The company hits hitch after hitch as it races to get its three Tasmanian projects up and running to cash in on the AI boom.

Come September and Firmus is a sponsor of not one, but three sporting bodies in Tasmania — the fabled Tasmania Devils AFL club, the JackJumpers and Jewels basketball teams, and Cricket Tasmania. Many see it as an attempt to build a social licence.

Despite these efforts, EMRS polling conducted in September found the majority of Tasmanians aren't keen on AI data centres setting up shop in the state. Women and younger people are leading the push against them.

Regardless of these sentiments, AI data centres are needed to power tools like ChatGPT and Claude which Australians are increasingly taking up.

Firmus claims its facilities can produce AI tokens much cheaper than its competitors, and its innovative cooling technology means they won't use much water.

But Firmus hasn't established much of a track record yet. It only has one operational AI data centre in Australia, which is in Melbourne.

The company wants 444 megawatts to power its three Tasmanian facilities, which would make it the state's biggest power user. We don't yet know where all that power will come from.

It seems investors, like Tasmanian communities, aren't yet convinced by what Firmus is selling. 

What was meant to be the biggest initial public offering since Telstra  — aiming to raise $7 billion to fund its AI data centre rollout — has been cancelled, with the company saying it will look to raise funds privately instead. 

Tasmanian projects keep running into trouble

When neighbouring communities found out about Firmus's Bell Bay project, they were furious at what they saw as a lack of community consultation.

Firmus responded to the backlash by hosting community drop-in sessions and fronting the media to address questions, but trust was already low.

The local council, George Town, ended up approving the data centre — it didn't see how it could say no under the planning laws.

It was a win for Firmus, but the company still appealed. It wasn't happy with a condition imposed by the council that would limit its use of backup diesel generators to during power failures, emergencies, maintenance and testing.

That caught the Environment Protection Authority by surprise. It's made a submission to the appeal saying it had understood the generators would only be used very infrequently, and had it known otherwise, it would have assessed the application differently.

Firmus's other new Tasmanian proposal, at Wesley Vale in the north-west, has faced even bigger hurdles.

The company accidentally revealed it wanted to use farmers' irrigation water to cool the facility — something state-owned Tasmanian Irrigation said it wasn't legally able to do. While Firmus only wanted a small amount of water, farmers were annoyed the company didn't talk to them about it. 

In the end, Firmus said it would just use rainwater and water it trucks in. But the problems weren't over yet.

The local council, Latrobe, decided it didn't want to determine the project's fate. It says the planning laws aren't up to scratch to make a decision on projects of this scale. Instead, it would rather the state government assess it as a major project, where broader questions, such as Firmus' monumental energy needs for the three projects, can be considered.

The project attracted more attention last month when Latrobe Council said Firmus may have started development work at Wesley Vale without approval.

Firmus says it was simply doing site maintenance permitted under its forest practices plan. Nonetheless, it's agreed to pause work while the council investigates — a process that remains ongoing.

Firmus's most progressed Tasmanian facility in Launceston is also tracking behind schedule. It was initially slated to be operational in the first half of this year, but that's been delayed to early 2027. 

A government document states Aboriginal relics were found at the site, and construction was paused while Firmus sought approval to relocate them.

Amidst last week's chaos with the initial public offering, Firmus pulled out of its scheduled Thursday appearance at a federal parliament AI inquiry taking place in Melbourne.

A detail in Firmus's submission to the inquiry raised eyebrows. The company has publicised its commitment to underwrite double the amount of renewable energy that it uses, and has implied that would be in Tasmania. But its inquiry submission states the new developments could be interstate.

Government committed to Firmus through it all

The Tasmanian government has been all aboard with Firmus since the beginning. 

In the lead up to the state election in July last year, the Liberals announced a "world-first AI factory zone" in northern Tasmania where Firmus was building an AI data centre. 

It wasn't a funding promise, but a political commitment to Firmus and its ambitions.

The Greens have led criticism of Firmus and the Tasmanian government's unwavering support for the company. 

To them, Friday's news the company had to pull its initial public offering was not surprising. They say it's reflective of questions and concerns raised about Firmus's projects that haven't been adequately addressed.

Questions are now being asked about what the cancellation of the share market float means for Firmus's announced projects.

Firmus says its plans haven't changed. It says it has the money to go ahead with its projects, including in Tasmania.

But the company has a long road ahead to convince investors and the public it can be trusted, and is worth embracing.