FMG - Fortescue Ltd

[basilio]

It will be interesting to see how "Green" that will be.

Well that is the plan SP. Twiggy went around the world looking for and promoting renewable energy projects for FFI. This seems to be one of them.
The proposed development will be using a planned Hydro electricity power station close by. The nickel is intended for EV batteries.

I think the most critical green issue will be dealing with mine wastes and ensuring there are no tailings dam disasters. It would be interesting to see if they can come up with a cleaner way of processing and dealing with wastes.

https://www.nasdaq.com/articles/indonesia-says-fortescue-tsingshan-to-invest-billions-in-borneo-2021-08-24

 

[basilio]

FMG is also commissioned to build a huge $80B Hydro Electric project in the Congo. I'm guessing they might also piggy back some mining projects alongside.

These are big deal projects. If they come off there will certainly be some big coin for FMG. As I undersatnd it FMG will contribute substantial starting funds and have a big interest in the project. However most the development capital will be sourced inside separate subsidiary companies.

Fortescue to develop huge Congo hydro project

Democratic Republic of Congo's government says it chose Fortescue Metals (FSUMF) to develop a series of dams that could become the world's largest hydroelectric project.The Grand...

seekingalpha.com

 

[basilio]

Doing my research I came across this very detailed analysis of FMG from Nov 2020.

It's not a 5 minute read but in IMV highlights the engineering and financial achievements of FMG and their potential to become a a very big player in developing renewable energy and green engineering .

By the way when this was published the iron ore price was $134 a ton

Fortescue: Reviewing The Past, The Present, And A Glimpse Into The Future​

Nov. 30, 2020 9:31 AM ETFortescue Metals Group Limited (FSUGY), FSUMF17 Comments12 Likes

Summary​

• It may seem implausible, but I have long considered it will be the miners and oil majors that will lead the way to a world of environmentally-friendly sustainable energy.
• Operating in remote locations, without access to nearby base load power and fuel infrastructure, creates fertile ground for innovation with renewable sources of energy.
• Applications abound for profitable experimentation with new and developing technologies by organizations steeped in innovation in the physical world of mining and machinery.
• All this coincides with massive public relations kudos, and enhanced access to capital, for embattled miners and oil companies who can lead the way toward a world of green energy.
• Fortescue is out of the blocks and running, leading the race to a world of environmentally-friendly sustainable energy.
• Looking for more investing ideas like this one? Get them exclusively at Dividend Growth Income+ Club. Get started today »

Investment Thesis​

Fortescue - Iron Ore Producer

On the surface, Fortescue (OTCQX:FSUGY) (OTCQX:FSUMF) is an iron ore miner, at the mercy of fluctuations in commodity prices, and with all its eggs in one basket, selling close to 95% by value of its ore into the Chinese market in 2020. Dig deeper, and one finds Fortescue has established moats through massive lowering of costs, working toward making its products increasingly indispensable to its customers' production efficiency, and creating a breadth of products for all market cycles. Fortescue will continue to have its highs and lows as market prices for iron ore fluctuate. But, due to the moats it has created and continues to widen, Fortescue will likely be "last man standing" in any sustained and deep downturn in iron ore prices, remaining cash flow and net income positive during even the deepest dips in iron ore prices.

Fortescue: Reviewing The Past, The Present, And A Glimpse Into The Future (OTCMKTS:FSUGY)

It may seem implausible, but I have long considered it will be the miners and oil majors that will lead the way to a world of environmentally-friendly...

seekingalpha.com

 

[syd1]

Dumb move I bought FMG shares at $22.60 & I have lost $3,500 so far. Looks like iron ore or FMG prices will keep falling for some time. Anyone knows how long will prices keep falling or how long it'll take for prices to recover? Would it be better so sell at such loss?

 

[qldfrog]

if anyone knew, they would be in the Bahamas smocking cuban cigar with top models around...Not typing on a keyboard for ASF posts

 

[againsthegrain]

I bought some in high 21s then bought in 20s and low 20s again and will buy in 19s fingers crossed in 18s too while pretending to smoke cuban cigars lol

 

[Dona Ferentes]

Next week Fortescue Metals releases what will be a record profit for the year to June and there will be a lot of chest-puffing and boasting about that, but one thing to keep in mind is that the record will be based on an average price for the year of $US135 a tonne (and $US168 a tonne for the final quarter).

At $US122 a tonne at the moment for 58% Fe fines, a repeat record for Fortescue won’t be happening any time soon.

 

[basilio]

Dumb move I bought FMG shares at $22.60 & I have lost $3,500 so far. Looks like iron ore or FMG prices will keep falling for some time. Anyone knows how long will prices keep falling or how long it'll take for prices to recover? Would it be better so sell at such loss?

No crystal balls here but there has been some quite excellent analysis of FMG's prospects.
Certainly the last year has been one of super profits that will result in a an exceptional cash dividend for 20-21. However FMG has been very successful at reducing it's operating costs and will continue to show very good profits and dividends on iron ore sales at prices well below the current levels.
The FMG thread is worth exploring.

 

[divs4ever]

i bought my FMG @ $19.90 and am thinking long term

mind you , the global economy could officially implode , and i will in just as much in trouble with the share portfolio as you

most of the global economy is in can-kick mode already , they are just trying to fool you that is the 'new normal' and nothing to worry about

 

[tech/a]

If your question relates to a painful draw-down in your account of $3500 then this is about the $3500 more so than the vehicle that your investing in.
If it was me Id be asking myself what my over all risk plan is on my trades and my portfolio.
If I didn't have one then Id be finding out what I need to know to save myself the anxiety of a $3500 draw down.

But If I dont have one and dont want one and accept that Im going to have draw-downs and sometimes painful ones than
Id have a look at the chart (Others have mentioned that FMG has some great funnimentals). Its pretty clear whats driving this!
Iron Ore Price.

I did some analysis a while ago which is still on the chart I've placed a line where it stopped previously (Red Dotted one).
Thought some continuation would be interesting for some.

Its pretty clear that the price of Iron Ore is directly related to performance
The commentary for this chart is very similar in my view.

If the current support low was taken out (By any appreciable amount) then I would be re evaluating.

 

[Craton]

Dumb move I bought FMG shares at $22.60 & I have lost $3,500 so far. Looks like iron ore or FMG prices will keep falling for some time. Anyone knows how long will prices keep falling or how long it'll take for prices to recover? Would it be better so sell at such loss?

G'day syd1 and welcome to ASF.
Ah, that sinking feeling...

You do know any specific advice can't be given like telling you to sell at such a loss?
Only you and/or your financial adviser can do that.

I can tell you that we have a pandemic but not if the iron ore price will continue to fall or how long it will take prices to recover. I can suggest that this will depend on a plethora of known and unknown details (e.g. what will our biggest iron ore importer do next?)

If I sound a tad harsh, that's probably because this is your first post and you haven't told us much about yourself or your trading style. We can make a pretty good guess as you don't mention, for example, Stop Loss.

Here is a iron ore link that might help you in feeling not so bad about your paper loss.
All the best on your trading/investment journey.

 

[over9k]

But:

Side by side:

However:

The result of all of this is that 95% of my money is no longer in Australian investments and the tiny bit that remains is in pure degen spec plays like DEG.

India doesn't need Australia's iron ore like china does for a whole multitude of reasons (india is not the world's workshop for one and for two, it can largely mine its own). However, even ignoring that, you still have a massive baby bust in literally the entire rest of the world aside from the USA.

The *world* has long since passed peak consumption. We're now in what the political spin doctors have decided to dub "post growth economies".



Not to be awful here but if you don't understand the significance of the charts I've posted above/don't know what they're telling you, then you don't know what you're doing investing. I don't own FMG but I'd want to be pretty bloody confident of where their demand is going to continue to come from because China isn't it.

 

[divs4ever]

Dumb move I bought FMG shares at $22.60 & I have lost $3,500 so far. Looks like iron ore or FMG prices will keep falling for some time. Anyone knows how long will prices keep falling or how long it'll take for prices to recover? Would it be better so sell at such loss?

another factor is FMG are liable to announce a dividend for the last six months shortly ,

now i am hoping for a $1 div. ( fully franked ) but others are suggesting much higher

now FMG is looking to diversify away from solely iron , and i suspect they will invest more cash in these other projects

FMG

FORTESCUE METALS GRP ORDINARY

Change

Balance Date	Dividend Type	Cents per share	Ccy	Franked %	Ex-Dividend Date	Books Close Date	Pay Date
31/12/2020	Interim	147.000	AUD	100.00	01/03/2021	02/03/2021	24/03/2021
30/06/2020	Final	100.000	AUD	100.00	31/08/2020	01/09/2020	02/10/2020
31/12/2019	Interim	76.000	AUD	100.00	02/03/2020	03/03/2020	06/04/2020
30/06/2019	Final	24.000	AUD	100.00	02/09/2019	03/09/2019	02/10/2019
-	Special	60.000	AUD	100.00	22/05/2019	23/05/2019	14/06/2019
31/12/2018	Interim	19.000	AUD	100.00	28/02/2019	01/03/2019	22/03/2019
31/12/2018	Special	11.000	AUD	100.00	28/02/2019	01/03/2019	22/03/2019
30/06/2018	Final	12.000	AUD	100.00	31/08/2018	03/09/2018	02/10/2018
31/12/2017	Interim	11.000	AUD	100.00	01/03/2018	02/03/2018	05/04/2018
30/06/2017	Final	25.000	AUD	100.00	01/09/2017	04/09/2017	03/10/2017
31/12/2016	Interim	20.000	AUD	100.00	02/03/2017	03/03/2017	06/04/2017

whether you decide to wait and keep the div. over sell on any last minute price rise is a decision you must make

good luck

 

[divs4ever]

View attachment 129547

But:

View attachment 129544

Side by side:

View attachment 129545

However:

View attachment 129543View attachment 129546


The result of all of this is that 95% of my money is no longer in Australian investments and the tiny bit that remains is in pure degen spec plays like DEG.

India doesn't need Australia's iron ore like china does for a whole multitude of reasons (india is not the world's workshop for one and for two, it can largely mine its own). However, even ignoring that, you still have a massive baby bust in literally the entire rest of the world aside from the USA.

The *world* has long since passed peak consumption. We're now in what the political spin doctors have decided to dub "post growth economies".



Not to be awful here but if you don't understand the significance of the charts I've posted above/don't know what they're telling you, then you don't know what you're doing investing. I don't own FMG but I'd want to be pretty bloody confident of where their demand is going to continue to come from because China isn't it.

i have been suggesting India was the place to be getting friendly with over the last 5 years

now we can try Mexico also but i think South American sources will win the bulk of that

Japan is a waning economy , while South Korea and Vietnam have room to grow ( especially if Korea unifies )

nobody seems to be watching Pakistan so you can only guess there

now where i disagree , i was given the impression the the Indian iron is at much lower grades and needed to be concentrated to be useful for high quality metals , i remember one trade spat where Russian was delivering steel stock to Indian customers cheaper the Tata Steel could produce it .. think about that Russia could make AND deliver it thousands on miles away cheaper than a major producer could make it and before they added delivery costs

i briefly had an investment in a company that planned to concentrate and pelletize Indian iron ore , and that company was leveraging the abundant low grade iron-ore deposits ( that few would extract ) and the growing Indian manufacturing needs

whereas FMG has plenty of reserves over the 50% Fe which is still profitable to mine most of the time

depending on how the Chinese belt and road initiative plays out China might have a very useful rail link to Russian coal , iron and uranium , i see the EU becoming less desirable as a trading partner to China

where i do agree is China is less likely to be our most important trading partner in the future for several reasons , one of which will be politics

cheers

 

[tech/a]

We are buying structural steel from Pakistan

 

[Value Collector]

Dumb move I bought FMG shares at $22.60 & I have lost $3,500 so far. Looks like iron ore or FMG prices will keep falling for some time. Anyone knows how long will prices keep falling or how long it'll take for prices to recover? Would it be better so sell at such loss?

I don’t think buying FMG at $22.60 was a dumb move, I actually bought some myself at around that price, although I do think that expecting shares not to fluctuate might be a little silly.

Share prices will fluctuate for all sorts of reasons, at the moment FMG’s share price has dropped because the Iron Ore price has dropped, I believe it’s an over reaction, the Iron Ore price has to be much lower than it is now to justify this price.

I think the best way to find out what to do next is to go back and examine the reasons you bought in the first place, what I mean by that is, were you planning to buy it as a long term investment? or was it a short term trade? or was is more of a gamble?

Once you figure out the reason you originally bought, make a decision on whether that reason is still a valid reason to hold.

——————
In short the reason I am still happy to hold, and why I am comfortable will the shares I purchased at around $22 is basically that I believe that even if the Iron Ore price only averaged $90, I think the shares are still worth at least $28.

if you like we have discussed FMG’s valuation from a lot of different angles over on the FMG thread.

 

[basilio]

Dumb move I bought FMG shares at $22.60 & I have lost $3,500 so far. Looks like iron ore or FMG prices will keep falling for some time. Anyone knows how long will prices keep falling or how long it'll take for prices to recover? Would it be better so sell at such loss?

I was having a chat with me mate Twiggy the other day and just like you he was taking a bit of a bath on FMG. In fact, from $22.60 to COT on Friday ($20.00) he saw $3 billion disappear - go up in smoke so to speak ! Bit of a shock to the system but as he said "Not to worry. I'm looking forward to a $2.5B plus cheque in the mail in a few weeks from my shares. She'll be right."

 

[divs4ever]

We are buying structural steel from Pakistan

so are we missing out on iron and coal exports ??

i wouldn't be surprised

 

[qldfrog]

so are we missing out on iron and coal exports ??

i wouldn't be surprised

I posted ,yesterday or the day before, an article about our coal exports since the de facto chinese boycott of Australian coal.not nice imho...

 

[tech/a]

No
They aren’t rolling bulk smaller structural beams in Australia.That’s what we buy.
China can’t supply enough for their own use so there is a scarcity there. Many countries roll steel from Chinese billets and strangely store them in bulk in Singapore. At the time of purchasing this lot 4 mths ago we couldn’t get boxes ( Containers ) However we do have some Chinese product now in the pipeline.
it’s not the Chinese not wanting to buy or supply Australia it’s as above.