FMG - Fortescue Ltd

[notting]

But I believe such a lashing on Andrew woas very unfair . He is the only AUSTRALIAN who helped millions of Australians to make money on FMG. He was a loner to fight against big guys like Rio and BHPB.At least he is fighting to save many faces including his own. At least he has not sold off his shares when there was hay day.Yes, FMG is under tremendous financial crisis.

When you balance it out there is no evidence of Andrew uplifting anybody. He has created an extremely risky entity built on other peoples money and debt whilst singing the praises of the Chinese who are profoundly corrupt and cruel - something Andrew claims to be working against!
That's about it.

I always suspected his mouthing off or so called uplifting the indigenous people is also a way of getting a leg over for land rights and so on.
The pain of all this is now being realized as he kind of side stepped out of the way just before this current implosion.

I would have admired him had he gotten out of his shares when they were say between 5.50 and 6. Then spent the rest of his days using that 10 billion to uncover what he really knows about the Chinese culture of vicious atrocities that is systematic in Chinese regime.

It's harder for governments who have to play an element of diplomacy, in order to soften trade deals and hopefully the culture over the longer term.
Andrew had his chance to make a difference as an individual with great wealth. Yet he preferred to, well, cover up what is far worse in scale and cruelty to any holocaust the world has seen, by praising the evil Chinese dictatorship, whilst having the gall to say he was trying to fight against slavery and inequality.

Doesn't gel.

 

[Value Collector]

When you balance it out there is no evidence of Andrew uplifting anybody.

What do you mean, he has provided plenty of jobs in communities that struggled prior, and he has pushed to provide aboriginals with training and employment opportunities they don't always have.

Any charity work he does is on top of this, I don't see why you are so negative about his community and charity work.

He has created an extremely risky entity built on other peoples money and debt

Can you name any large infrastructure company that hasn't used debt in the early stages to fund the development of the infrastructure?

whilst singing the praises of the Chinese who are profoundly corrupt and cruel - something Andrew claims to be working against!
That's about it.

I doubt any foreigner, let alone an Aussie can influence chinese internal politics, saying that though, the chinese industrialization, built with Australian Iron ore, has lifted millions of people out of poverty. How is this a bad thing.

I would have admired him had he gotten out of his shares when they were say between 5.50 and 6.

That's probably where you and I differ, I admire people who build great companies, and then back them for decades, taking the ups and downs in their stride.

Then spent the rest of his days using that 10 billion to uncover what he really knows about the Chinese culture of vicious atrocities that is systematic in Chinese regime.

Nothing is going to change the chinese government except changes from within.

 

[Value Collector]

I can't imagine the Government approving the sale of port and rail infrastructure to the CHinese.

I couldn't see why they wouldn't, but either way, there is plenty of ways to unlock equity through various financial schemes that would achieve the same result.

BHP/ Rio all have lots of foreign shareholders, So foreigners are already owning Australian port and rail infrastructure. not to mention one of our big coal terminals is Canadian owned.

But it wouldn't have to be chinese anyway, there would be heaps of interest from the chinese, but no doubt BHP and Rio would be interested in making sure those 5 births don't fall into the hands of another competitor, the would be making bids also.

 

[notting]

What do you mean, he has provided plenty of jobs in communities that struggled prior, and he has pushed to provide aboriginals with training and employment opportunities they don't always have.

I think you missed the words 'On balance' meaning the amount being lost now and the cover up of suffering in China and the countries it attacks and occupies.

Any charity work he does is on top of this, I don't see why you are so negative about his community and charity work.

I'm not negative about it in isolation. I question his motives, it's more like an investment in his own character, which he seldom shy's away from promoting about 'himself.' Like I said if he really wanted to do that, he could have on a much greater scale.

Can you name any large infrastructure company that hasn't used debt in the early stages to fund the development of the infrastructure?

It's irrelevant. It depends on the level of risk, and the greatest enterprises have no debt but massive amounts of cash - like Apple.

I doubt any foreigner, let alone an Aussie can influence chinese internal politics, saying that though, the chinese industrialization, built with Australian Iron ore, has lifted millions of people out of poverty. How is this a bad thing.

You certainly can. You make them understand that business will be hard for them if they continue to brutalize their own and other people whose countries they occupy. You also use your means to highlight how the the Chines import children for sex slavery from places like Vietnam.

That's probably where you and I differ, I admire people who build great companies, and then back them for decades, taking the ups and downs in their stride.

I don't admire a fool who builds a highly risky enterprise and can't even save himself when clear fundamentals indicate the risk. The one who should know the business better than any other should be able to recognize that and know when to exit and save himself for a greater good if that is what he really is about.
He claims his main focus is now to abolish slavery and so on so it would make sense that he should have gotten out of FMG as there is a clear conflict of interest, if he still owns a large chunk of a company who is 100% selling to the biggest and most brutal slave nation of them all - China.
His actions are not in line with his claims.

Nothing is going to change the Chinese government except changes from within.

Well if Andrew had cashed out his 10 billion -
He could have perhaps organized global board meeting between all the union leaders in the free world and create a political body that would make it very hard for the Chinese to sell anything unless they provided standards and transparency as to how it was created.
This would save and create jobs all over the world and show to the Chinese that they will not flourish unless they become humane.
Andrew could use the union movements because they have a vested interest in employment and they have a genuine moral stance in issues when they get to this horrific level of social abuse by those in power like the Chinese.
Andrew, if he was genuine, also could have used that wealth to shame businesses using the kind of slavery and corruption to make their products and he could advertise against politicians fudging over it to garner trade deals.

Andrew could have added that he believes in free markets, and what needs to be understood is that slavery and brutality is not free, its forced and in the end has consequences for the well being and prosperity of all humanity. China is not a free market it's an evil dictated economy so there is no contradiction in creating and using a unified global union to genuinely fight for humanity.
China is the worst in scale and brutality, so he should address them first, then they could target the Africans and so on who would likely start to change as a result any way.

 

[Value Collector]

As I said I think you are being rather negative towards a guy who has donated millions of dollars to some very good causes, to lump the problems of china on one Australian Business man seems very unfair, plenty of other business leaders selling into china or producing in china that you don't seem to fuss about. I mean do you hold such feelings about other companies such as Apple? or other investors such as Buffet?

Comments on forests personal charity dealings and the chinese government probably are better suited to another thread

I don't admire a fool who builds a highly risky enterprise and can't even save himself when clear fundamentals indicate the risk.

"Can't save himself"????

I think he originally put about $6Million dollars of his own money into Fortescue, and has since earned 100's of millions in dividends, I don't think he needs saving and I don't think he is a fool, If so I wish I was more foolish.

The fundamentals of the business are a lot different than you make out, I have stated my case and am happy to let time prove me right.

 

[notting]

As I said I think you are being rather negative towards a guy who has donated millions of dollars to some very good causes, to lump the problems of china on one Australian Business man seems very unfair, plenty of other business leaders selling into china or producing in china that you don't seem to fuss about.

It's not unfair because he puts himself out there as a bastion against slavery whilst selling into it (the others don't)!
Don't get me started on Murdoch, he ended up being spanked by his lovely Chinese bride, but at least he never said he was all about anti slavery. This is my point!!!!

"Can't save himself"????

When your net worth has gone from 12Billion or so to 2.4Billion in charity run by your wife, your not saving, your losing, especially when you had grand proclamations and about what you were going to do with it all. I'm calling that foolish.

I think he originally put about $6Million dollars of his own money into Fortescue, and has since earned 100's of millions in dividends, I don't think he needs saving and I don't think he is a fool, If so I wish I was more foolish.

Ah yes but we seem to have lost our focus here once again. Andrew walks away with millions but billions are lost by others as a consequence of his activities, with not even a moral benefit, ON BALANCE, to anyone (apart from Andrew Forrest).

The fundamentals of the business are a lot different than you make out, I have stated my case and am happy to let time prove me right.

I hope the price of IO turns around and he gets his chance to exit and live up to his claims. It seems like it may be a long road from here, and I doubt he will be around to see it. So in the end - not impressed.

 

[stit]

Thanks for your response value. What is your take on his numbers re current supply/demand of iron ore? Do you think that it is currently being impacted by market sentiment as much as he says?

 

[Value Collector]

When your net worth has gone from 12Billion or so to 2.4Billion in charity run by your wife, your not saving, your losing, especially when you had grand proclamations and about what you were going to do with it all. I'm calling that foolish.


.

His wealth went from much less than $50 Million, to a paper high of $12Billion caused by speculation in FMG's share price, and is now at a very reasonable $2.4 Billion.

$50 Million to $2.4 Billion is a massive, I don't think you would complain if that happened in your portfolio. the $12 Billion number was not really real, it was caused by a temporary spike in fmg share price, FMG was not worth $12 a share when it traded that high, so his quoted net worth wasn't real, he couldn't have ever gone to $12Billion cash.

Fmg is actual worth much more today than it was when it's share price hit $12, Just as it wasn't worth $12 then, it's worth much more than it's current share price now.

Also he is not dead yet, he is still relatively young, he still has plenty of time to keep building wealth and donating to causes.

Andrew walks away with millions but billions are lost by others as a consequence of his activities, with not even a moral benefit, ON BALANCE, to anyone (apart from Andrew Forrest).

Who has lost Billions?

Any one who invested into fortescue at the start has made ship loads of money, the only people you could say have lost are the ones that bought at the high and sold low, but their loss is offset by the zero sum gain of other investors who sold to them, so the market as a whole has made a massive net gain on FMG.

So FMG has made it's investors rich through large capital gains and dividends, Paid Millions to the government in royalties and taxes, Paid millions in wages, Paid millions in interest, paid millions in contracts etc, and brought millions of tonnes of product to an undersupplied market.

Every one seems to have done well, Who lost?

 

[Value Collector]

Thanks for your response value. What is your take on his numbers re current supply/demand of iron ore? Do you think that it is currently being impacted by market sentiment as much as he says?

Yeah, I think market sentiment definitely has an effect, I can't see anything glaringly wrong with his figures, it fits in with other figures I have seen in other company reports and some news releases.

As he pointed out port stocks have gone down, but also I have see other reports that show Mills are holding less stock at the mills as they have run down stocks as the prices have fallen, this can only go on so long, if the price creeps up as seasonal demand comes on, there may be a rush to restock.

But saying that, Its very important to point out this is a 2 - 3 year play.

 

[skc]

I had no idea that mine workers do 8 days on, 6 days off. That's like 42.86% of days off. Compared that to a standard office worker who does 5 days on, 2 days off... which is only 28.57% of days off.

In other words, the 8/6 roster is like having a 3.75-day weekend every week.

The change to 2 weeks on, 1 week off makes it 33.33% off time, which is closer to the standard work week.

http://www.afr.com/business/mining/...st-more-than-700-pilbara-jobs-20150414-1mkqd1

 

[VSntchr]

The change to 2 weeks on, 1 week off makes it 33.33% off time

Quantified like a true statistical trader
Another consideration is travel time.

 

[sikboy]

How many hrs a day are the miners working?

 

[notting]

The conditions are pretty basic and many are fly in fly out so have to spend lots of time without seeing their family and hanging out in these kinds of gigs!!!

 

[Value Collector]

How many hrs a day are the miners working?

I think there is two 12 hour shifts a day, but I could be wrong

 

[sikboy]

Yeh that's what I thought. In anyways, I think most miners work longer days than the average office worker so skc's calculations are probably off.

 

[Value Collector]

Yeh that's what I thought. In anyways, I think most miners work longer days than the average office worker so skc's calculations are probably off.

Here is the company video showing life at the mine site if you're interested.

[video]https://m.youtube.com/watch?v=Ni8yVMxJDi0[/video]

 

[notting]

Who has lost Billions?

It seems I am talking of potential losses to creditors and yes share holders who bought in at what ever level you believe is reasonable, which by the way is what according to your aspirations/valuation?

 

[Value Collector]

It seems I am talking of potential losses to creditors and yes share holders who bought in at what ever level you believe is reasonable, which by the way is what according to your aspirations/valuation?

Creditors haven't lost anything, all interest is being paid and some creditors have recieved principle early.

And as I explained, investors have received a massive net gain, sure anyone who bought in at $12 and sold out now is down $10 a share, but this is completely offset by the gain the investors who bought in at $0.05 per share and sold at $12. over all, the current market cap is much higher than the capital that was originally injected by investors, plus there has been some dividends larger than the original capital, so there is a net gain over all to investors, if any indivual has lost, that's just poor timing on their part.

You can find people that have lost money on any company, no doubt many people have lost money on cba shares at various times, but cba has generated net gains to investors of billions of dollars, becuase its current market cap is probably more than a million times higher than its founding capital, and it's paid billions in dividends, the fact some people bought in a high and sold at a low isn't the companies fault.

What the true value of the company is will depend on the margin they are able to make and how many tonnes they are able to mine and ship.

I am very confident that the market price of iron ore will eventually settle at a price that bhp, rio, vale, and FMG can all make a decent margin, that will be achieved by high cost ore leaving the market, the remaining players reducing costs, I believe when this happens FMG will beable to make between $10 and $20 per tonne.

if FMG can make $10 per tonne, they are easily worth $6 - $8 per share, at $20 per tonne they could be worth $15 per share.

as I said this is going to be maybe a 2-3 year play, but the rewards for me will be well worth the wait.

 

[notting]

FMG right now has a market value of $5,5 Billion.
Has debts between 8 and 9 Billion, is losing money at the current price of IO.
Will need to pay interest on that 8 to 9 Billion.
That's around a 3 to 4 Billion dollar negative.
I guess you could call these Billions of dollars of losses in it's current predicament and counting!

 

[Miner]

How many hrs a day are the miners working?

I think there is two 12 hour shifts a day, but I could be wrong

Not sure if this will make sense to some who are unaware of FIFO system
If a Miner works 8+6 system means he or she will work 8 days straight @12 hours. If you compare this with some one 9 to 5 working 40 hours per week plus annual leave, public holidays, sick leave etc.
A person with FIFO work does not get annual leave or public holidays. So eventually over two weeks a Miner works 48 hours per week. Plus penalty for working additional hours, plus free food and lodging, plane fare.
So it is immaterial if a Miner works 12 hours a day.
Before any one gets too concerned, a Central Asian Miner asking to work 11.5 hours per day for 6 days a week and 6 hours on 7th day, no break for 8 continuous weeks and then 32 hours total travel time between Perth to the minesite on 8+2 schedule. If you see what life others have to in mines outside Australia, the FIFO schedule for companies like FMG with 1 - 2 hours flight is working in heaven. Please do not forget most of the times Australian Miners travel on company hours. If people still are unhappy, they should go to work in China, Mongolia or Kazakhstan to know the reality.
DO not hold FMG.