FMG - Fortescue Ltd

[Value Collector]

Does anybody else think that this is p*ss poor form from Fortescue in terms of continuous disclosure? This story was all over various media outlets for a full 24 hrs before they informed the ASX. Also have heard speculation that the story was confirmed form sources within Fortescue itself, which if it is true is not a good look, talking to the media before making an announcement to market. And how was it not market sensitive?View attachment 120200

I think that is part of the reason that certain people are walking the plank, I honestly think EG and the board have been mislead in some way, and have only just figured out what was happening, hence the forced resignations.

 

[basilio]

As anticipated an excellent half year report. Half yearly dividend raised to $1.47 . Quite ridiculous results but I don't think anyone is going to send back the bucks.

Wonder how shareholders who sold out earlier this week are feeling ? Particularly if they were stop loss sales ?

 

[joeno]

you'd be crazy to sell at these valuations. I don't care if the new mine is a failure and write off (prob isn't as all ambitious projects have growing pains). FMG is worth $60. It's just too profitable. Iron and steel ain't going away for the next 20 years.

 

[Ferret]

Wonder how shareholders who sold out earlier this week are feeling ?

Wishing I had been away from my computer when the notice came out!

Still, the great run in FMG had me a little bit overweight in it, so I'll try to convince myself that selling some was a sensible re-weighting!

 

[Value Collector]

As anticipated an excellent half year report. Half yearly dividend raised to $1.47 . Quite ridiculous results but I don't think anyone is going to send back the bucks.

Wonder how shareholders who sold out earlier this week are feeling ? Particularly if they were stop loss sales ?

Great result, I am actually a little bit speechless, to think that not to long ago the shares were trading at not much more than this dividend.

I am a very happy holder, FMG proves Ben Grahams saying -

“The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.”​

The Investors best tools will always be sound reasoning, ability to identify facts, patience and most importantly the ability to not panic and be comfortable going against the crowd when the crowd in wrong.

 

[Value Collector]

check out this video from the 3.30 mark, it’s shows how a magnitite mine and processing works.

These mines in the USA ran out of high grade ore decades ago but have been able to continue producing high grade ore by processing taconite rocks and removing the magnitite ore.

Check out this old video from the 1950's, watch it from the 6.50 minute mark you will see them explaining how Minnesota was running out of the "direct shipping ore" as far back as the 1950's, and moved to mining low grade magnetite which they are still mining today 70 years after they ran out of the high grade ore.

This is why FMG is getting on the front foot and investing to develop the Iron Bridge project, because so far BHP, RIO, FMG and the rest of the WA Iron ore industry has only been focussed on just the High grade direct shipping ore, but eventually in future decades that will run short and they will be forced to begin mining the low grade stuff, by that time FMG will be expert at it, and dominate the market, because they have already taken control of some many low grade tenements the others never bothered to peg out.

The video in my above quote shows them mining the deposits talked about in this 1950's video.

watch from the 6.50 minute mark.

 

[basilio]

FMG movement to Green Hydrogen is very substantial. As noted in their Final Report they are allocating 10% of their profits to investments in renewable energy and Green Hydrogen. So while other companies are establishing themselves with plans , ideas and fund raising... FMG has already allocated $400m to making this happen.

Early move in the industry with plenty of cash and the capacity to use the renewable energy product to drive down their current costs of iron ore production even further. Has to be a very promising future.

Fortescue puts aside $400m for new hydrogen, wind and solar projects​

James Fernyhough 18 February 2021
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Fortescue Metals is set to funnel at least $400 million into renewable energy technologies such as wind, solar and green hydrogen, as it ramps up its push to be one of the world’s biggest clean energy companies.

That would come on top of around $100 million of investment this financial year. If the iron ore price remains high, the $400 million figure could be several hundred million dollars higher by the end of the financial year.

Fortescue puts aside $400m for new hydrogen, wind and solar projects

Fortescue to channel 10 per cent of future profits into renewable energy to help meet its green hydrogen ambitions.

reneweconomy.com.au

 

[basilio]

Back in November at the AGM Twiggy outlined the big picture view of where he wanted to take Fortescue. The funds allocated from the super profits of the current iron ore prices should certainly push this development quickly.

Fortescue leads “stampede” into green energy with stunning plans for 235 gigawatts of wind and solar

Fortescue to lead “stampede” into renewables with stunning plan to build more than 235GW of wind and solar capacity and a green hydrogen industry.

reneweconomy.com.au

 

[Knobby22]

Back in November at the AGM Twiggy outlined the big picture view of where he wanted to take Fortescue. The funds allocated from the super profits of the current iron ore prices should certainly push this development quickly.

Fortescue leads “stampede” into green energy with stunning plans for 235 gigawatts of wind and solar

Fortescue to lead “stampede” into renewables with stunning plan to build more than 235GW of wind and solar capacity and a green hydrogen industry.

reneweconomy.com.au

It is interesting. Is it realistic?

 

[basilio]

It is interesting. Is it realistic?

Hard to say.

However when you own 36% of a company making $8b a year profits and the company itself is investing 500M into kicking this project away you have to have some sort of a chance ...

I believe many people and companies are coming quickly to the view that a hydrogen economy makes great economic and environmental sense. Having years of engineering experience in big projects and a very healthy bank balance to begin staking these ventures will give Twiggy the best start possible.Certainly better I suggest than a multitude of new start ups with a plan and a need to find all the big bucks required initiate the projects.

 

[basilio]

FMG released an update of their joint venture drilling project with Tasmin at Lake Torrens.
Certainly gave TAS a kick along. Be interested to hear what implications there are for FMG future mining opportunities.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02349746-6A1023083?access_token=83ff96335c2d45a094df02a206a39ff4

 

[Value Collector]

Hard to say.

However when you own 36% of a company making $8b a year profits and the company itself is investing 500M into kicking this project away you have to have some sort of a chance ...

I believe many people and companies are coming quickly to the view that a hydrogen economy makes great economic and environmental sense. Having years of engineering experience in big projects and a very healthy bank balance to begin staking these ventures will give Twiggy the best start possible.Certainly better I suggest than a multitude of new start ups with a plan and a need to find all the big bucks required initiate the projects.

An interesting part of the half year results was their plan for future profits, eg 80% dividends, 10% into mining projects and 10% into green energy.

So it looks to me like their plan is to continue investing and growing their mining projects which will be their main income source, while also developing a growing renewable energy business.

 

[dat111]

An interesting part of the half year results was their plan for future profits, eg 80% dividends, 10% into mining projects and 10% into green energy.

So it looks to me like their plan is to continue investing and growing their mining projects which will be their main income source, while also developing a growing renewable energy business.

I hope FMG uses government money for the green initiative...only way it makes money...

 

[Value Collector]

I hope FMG uses government money for the green initiative...only way it makes money...

Why would using government money be the "only way it makes money"?

I mean if they build a wind farm (or something else) for $100 Million, and it produces $10 Million in profits each year after costs and depreciation, why would they need government money?

Fortescue isn't a charity, its a for profit business, they are only going to take on projects that they believe have a decent chance of turning a profit, its going to be no different to their mining operations, eg the don't green light a new mine unless they expect it to produce an income stream that produces a profit of its life on top of returning the original cash outlaid.

 

[joeno]

Government subsidies could be one of the perks. If the Aussie govt has the people's interest at heart then they will support companies like Fortescue with this green initiative.

Also the recent sacking of high-level officers for underperformance is a good thing. No exceptional company will allow their high level executives to sit comfortably on their bums and underperform and face no consequences. Sever any dead weights asap and keep moving forward.

 

[dat111]

Why would using government money be the "only way it makes money"?

I mean if they build a wind farm (or something else) for $100 Million, and it produces $10 Million in profits each year after costs and depreciation, why would they need government money?

Fortescue isn't a charity, its a for profit business, they are only going to take on projects that they believe have a decent chance of turning a profit, its going to be no different to their mining operations, eg the don't green light a new mine unless they expect it to produce an income stream that produces a profit of its life on top of returning the original cash outlaid

Fortescue is committed to taking a leadership position on climate change. We have a proud history of setting stretch targets and during FY20 announced an emissions reduction goal to achieve net zero operational emissions by 2040, positioning us as a leader in addressing the global climate change challenge.

This is what is on their site. The only way that a wind farm or solar field makes sense is if they are trying to achieve some type of carbon offsets... that is what is being reported as additional costs to make the wind and solar close to the cost of a natural gas power plant.

I guess what I am thinking is that isn't it a bit hypocritical for Fortescue to come along and say they are going to have zero operational emissions when the product Fortescue produces is being sent to a location that only cares about pollution when it gets so bad that they have to shut down their operations...

• Iron ore futures in Singapore fell 5.8% to hit a three-week low amid concerns that demand in top consumer China is cooling after the country's Tangshan steelmaking hub imposed more production restrictions to combat pollution.

 

[Value Collector]

Fortescue is committed to taking a leadership position on climate change. We have a proud history of setting stretch targets and during FY20 announced an emissions reduction goal to achieve net zero operational emissions by 2040, positioning us as a leader in addressing the global climate change challenge.

This is what is on their site. The only way that a wind farm or solar field makes sense is if they are trying to achieve some type of carbon offsets... that is what is being reported as additional costs to make the wind and solar close to the cost of a natural gas power plant.

I guess what I am thinking is that isn't it a bit hypocritical for Fortescue to come along and say they are going to have zero operational emissions when the product Fortescue produces is being sent to a location that only cares about pollution when it gets so bad that they have to shut down their operations...

• Iron ore futures in Singapore fell 5.8% to hit a three-week low amid concerns that demand in top consumer China is cooling after the country's Tangshan steelmaking hub imposed more production restrictions to combat pollution.

I don’t see the hypocrisy in trying to reduce your carbon emissions, it would be stupid to suggest Fortescue avoid taking action until customers down the line are perfect.

firstly China is actually making massive steps to move towards cleaner energy.

However, even if China didn’t at all care about climate change, why would that be a reason for us not to try and reduce the pollution from the parts of the system that we control? it’s like you are saying Bunnings would be hypocritical for installing solar panels on their store because some of their customers are climate deniers, the fact is Bunnings (and fortescues) emissions are their responsibility, and are separate from their customers.

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solar and wind do make economic sense for Fortescue, because over time they will produce more in value than they cost to build, especially because they will be not only offsetting gas but also diesel.

 

[basilio]

solar and wind do make economic sense for Fortescue, because over time they will produce more in value than they cost to build, especially because they will be not only offsetting gas but also diesel.

The savings on input costs will be part of their drive to reduce the base cost of iron ore production. Twiggy knows that when the iron ore price inevitably falls it will be the lowest cost producers who are able to stay in the game the longest.

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Certainly some heavy selling today. Currently 5.77% down. There was pretty apocalyptic analysis posted today on the net by one of teh tea leaf readers.

Daily iron ore price update (you have been warned)

When iron ore prices are so high, this is what can happen. Yesterday Dalian futures were crushed 10% limit down with some minor repair overnight. Spot was crushed as well as steel held up OK: The proximate trigger was three days of further output shutdowns at Tangshan steel mills to combat...

www.macrobusiness.com.au

 

[Value Collector]

Certainly some heavy selling today. Currently 5.77% down.

FMG has been pretty volatile both up and down recently, with the fantastic operational results of the last couple of years we have seen big share price and dividend growth, while I still believe it is under valued, I think FMG have attracted a large following of shareholders and shorters who are very speculative, and tend to panic sell and create a lot of negative feedback and stop loss triggers etc.

In my opinion its best just to focus on the underlying operational results, FMG is currently valued as if the Iron ore price was about $93, so we are in a very good position provided you are long term focused and willing to ignore this noise.

 

[dat111]

I don’t see the hypocrisy in trying to reduce your carbon emissions, it would be stupid to suggest Fortescue avoid taking action until customers down the line are perfect.

firstly China is actually making massive steps to move towards cleaner energy.

However, even if China didn’t at all care about climate change, why would that be a reason for us not to try and reduce the pollution from the parts of the system that we control? it’s like you are saying Bunnings would be hypocritical for installing solar panels on their store because some of their customers are climate deniers, the fact is Bunnings (and fortescues) emissions are their responsibility, and are separate from their customers.

———————
solar and wind do make economic sense for Fortescue, because over time they will produce more in value than they cost to build, especially because they will be not only offsetting gas but also diesel.

From a business standpoint. Increasing cost to create good will is understandable. That is what is being done. Fortescue is going green... Have a slide discussing this on every presentation... Put the climate folks onto someone else...

What I am actually saying is that it doesn't make sense for Mt. Piper Power Station to put solar panels on their buildings and claim that they are green or better yet Clarence Colliery coal mine to put solar panels up and claim that they are green.

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