FMG - Fortescue Ltd

[divs4ever]

The green projects won’t take a decade to show results, many will producing results incrementally as different stages are completed, for example FMG already have 60MW of solar installed and producing, which is directly offsetting the consumption of natural gas.

As they continue to roll out gigs watts of solar, wind and batteries, they won’t be waiting till it’s 100% complete before linking it up to their grid, they will link it up in stages.

Your comment also reminds me of a conversation I had with my Dad back in 2009, a Gas company we were invested in was planning to build Australia’s first LNG export plant, but it wasn’t going to be complete until 2013, I was excited about project, but Dad couldn’t be fussed about it because 2013 was 4 years away.

But, now it’s 2022 and that LNG plant has been making money for 9 years, and the projects 4 year time frame seems like nothing.(our company got taken over before the plant was completed, and me made a lot of money)

My point is time will pass anyway, you may as well be investing in long term projects if the end result having stronger cash flows in the future, and especially if as in FMG’s case holding the company provides you will above average income returns in the mean time anyway.

now i am not pretending to mind read your dad on the LNG plant , but i would have held back as well not just 4 years away ( plus whatever delays that might happen ) but say 5 or 6 years before it started paying divs , i could have probably taken less risk elsewhere ( say a company like CSR ) got returns and some growth

now don't get me wrong , i am delighted your bet worked out for you but i certainly wouldn't beaten myself up about missing that opportunity

just like my late ( only last year ) entry into FMG i was watching and watching i would have been tempted to buy some bonds in the FMG port project if they had of been offered in Australia to Australians but as far as i am concerned i bought FMG shares at the right time for ME ( and all you folk who got in earlier and were rewarded .. good for you )

and 4 years currently at my stage of life is a very long time away ( i MIGHT be doing better in the corporate bond market by then , instead of having almost no exposure currently )

 

[Sean K]

The green projects won’t take a decade to show results, many will producing results incrementally as different stages are completed, for example FMG already have 60MW of solar installed and producing, which is directly offsetting the consumption of natural gas.

As they continue to roll out gigs watts of solar, wind and batteries, they won’t be waiting till it’s 100% complete before linking it up to their grid, they will link it up in stages.

Your comment also reminds me of a conversation I had with my Dad back in 2009, a Gas company we were invested in was planning to build Australia’s first LNG export plant, but it wasn’t going to be complete until 2013, I was excited about project, but Dad couldn’t be fussed about it because 2013 was 4 years away.

But, now it’s 2022 and that LNG plant has been making money for 9 years, and the projects 4 year time frame seems like nothing.(our company got taken over before the plant was completed, and me made a lot of money)

My point is time will pass anyway, you may as well be investing in long term projects if the end result having stronger cash flows in the future, and especially if as in FMG’s case holding the company provides you will above average income returns in the mean time anyway.

Are the examples you've provided FFI projects, or just FMG adjusting how they provide power to their own IO projects?

I thought FFI was more about green power to be exported or supporting and developing projects other than those that simply power their own trucks and trains. Things like hydro in PNG, hydrogen in Jordon, electrolyser in Gladstone, green hydrogen in the UK, the list goes on. These are not 1-5 year projects that will cost billions and won't turn a profit for a very long time. The financial upside for shareholders is a very long way off. It's almost like investing in an exploration company, inside an iron ore operation.

 

[Value Collector]

Are the examples you've provided FFI projects, or just FMG adjusting how they provide power to their own IO projects?

I thought FFI was more about green power to be exported or supporting and developing projects other than those that simply power their own trucks and trains. Things like hydro in PNG, hydrogen in Jordon, electrolyser in Gladstone, green hydrogen in the UK, the list goes on. These are not 1-5 year projects that will cost billions and won't turn a profit for a very long time. The financial upside for shareholders is a very long way off. It's almost like investing in an exploration company, inside an iron ore operation.

I think it’s both, it’s a $9 Billion mega project, that will be used to provide energy to its operations as it scales up, and obviously be also incrementally added and eventually used to make and export hydrogen too.

some of their projects will be 1-5 years, others longer buts that’s the same with all big green field mining projects any way, it’s kind of they way they normally operate, I am sure some people would have thought investing in FMG in 2003 and knowing the company wouldn’t be fully set up with four mines operating until 2013 would have seemed such a long time, but now it’s 2022.

https://www.pv-magazine-australia.c...e-5-4-gw-renewable-energy-project-in-pilbara/

 

[Value Collector]

now i am not pretending to mind read your dad on the LNG plant , but i would have held back as well not just 4 years away ( plus whatever delays that might happen ) but say 5 or 6 years before it started paying divs , i could have probably taken less risk elsewhere ( say a company like CSR ) got returns and some growth

now don't get me wrong , i am delighted your bet worked out for you but i certainly wouldn't beaten myself up about missing that opportunity

just like my late ( only last year ) entry into FMG i was watching and watching i would have been tempted to buy some bonds in the FMG port project if they had of been offered in Australia to Australians but as far as i am concerned i bought FMG shares at the right time for ME ( and all you folk who got in earlier and were rewarded .. good for you )

and 4 years currently at my stage of life is a very long time away ( i MIGHT be doing better in the corporate bond market by then , instead of having almost no exposure currently )

The company already owned lots of operating gas wells, and some gas fired power stations, and paid a decent dividend, the 4 year LNG plant was just a cherry on top (remind you of FMG).

So I was already excited to own the company, But I could see that the LNG plant was going to allow them to pump a lot more gas and sell it at much higher prices, and it was only 4 years away.

but as I said an international company swooped in 6 months later and took over the company, which produced a decent return for share holders, obviously the 4 year wait didn’t bother them.

 

[Value Collector]

The way I think about companies like FMG (and BHP, BP, Rio and others that have a lot of large projects in different stages of development) is that they have a list of exisiting assets income producing assets with different life spans, and they have a list projects under at different stages of completion going all that will grow that list of income producing assets or replace some of the assets who’s life span ends.

I think of that list of developments as a pipeline, where projects enter the pipeline when they are started, and pop out a few years later when completed.

What FMG/FFI is doing now is loading up/priming that development pipeline, some projects will take longer than others to work their way through the pipe what will happen is eventually just like a water pipeline, we will see a steady flow of completed developments coming out the end.

The Iron Bridge development will pop out earlier next year, different stages of the Pilbara energy project will be piping out over the next several years.

What will be good for FMG is if they have a strong team producing a list of possible developments that compete for capital, and as each one gets capital allocated it enters the pipe.

 

[Sean K]

I am sure some people would have thought investing in FMG in 2003 and knowing the company wouldn’t be fully set up with four mines operating until 2013 would have seemed such a long time, but now it’s 2022.

I was certainly one of those people who thought Twiggy was dreaming back then. Egg on face emoji here.

 

[Value Collector]

I was certainly one of those people who thought Twiggy was dreaming back then. Egg on face emoji here.

I too have egg on face, I doubted Tesla even though I loved the concept and had ordered a car, and followed Elons progress, I was still worried they would run out of money, I could have been worth about $13 Million dollars more today if I had more faith in Elon hahaha.

But that is one of the Great things in my opinion about FMG, you can buy it today for less than what it’s existing producing assets are worth, and you get this potentially huge development pipeline for free.

 

[basilio]

What would happen to FMG and Andrew Forrests vision if he fell under the proverbial bus ? To put that in perspective he has already beat COVID and just managed to avoid a terrorist attack on one of his round the world trips in 2020.

Just wonder who would pick up the baton with the same drive ? It's a serious question. Key man issues with major companies are always critical. I think probably more so with FMG.

Found a story that explores the challenges to FMG's desire to be carbon neutral by 2030.

Ten hurdles to Twiggy's green vision for FMG

Andrew Forrest has put his iron ore miner FMG on a fast track to net-zero emissions by 2030. Achieving high speed on a rocky road will not be easy.

www.boilingcold.com.au

Forrest, FMG team dodge deadly terrorist attack

Australia's richest man, Andrew Forrest, was in Afghanistan when his key contact was targeted by terrorists who blew up 10 people.

www.afr.com

 

[sptrawler]

What would happen to FMG and Andrew Forrests vision if he fell under the proverbial bus ? To put that in perspective he has already beat COVID and just managed to avoid a terrorist attack on one of his round the world trips in 2020.

Just wonder who would pick up the baton with the same drive ? It's a serious question. Key man issues with major companies are always critical. I think probably more so with FMG.

Found a story that explores the challenges to FMG's desire to be carbon neutral by 2030.

Ten hurdles to Twiggy's green vision for FMG

Andrew Forrest has put his iron ore miner FMG on a fast track to net-zero emissions by 2030. Achieving high speed on a rocky road will not be easy.

www.boilingcold.com.au

Forrest, FMG team dodge deadly terrorist attack

Australia's richest man, Andrew Forrest, was in Afghanistan when his key contact was targeted by terrorists who blew up 10 people.

www.afr.com

I think more of a worry for FMG, is if the top end of town is expected to repair the budget, the banks already have a surcharge tax.
So really Twiggy getting taken by a shark, or being run over by a bus, is probably less of an issue IMO.

 

[Value Collector]

What would happen to FMG and Andrew Forrests vision if he fell under the proverbial bus ? To put that in perspective he has already beat COVID and just managed to avoid a terrorist attack on one of his round the world trips in 2020.

Just wonder who would pick up the baton with the same drive ? It's a serious question. Key man issues with major companies are always critical. I think probably more so with FMG.

Found a story that explores the challenges to FMG's desire to be carbon neutral by 2030.

Ten hurdles to Twiggy's green vision for FMG

Andrew Forrest has put his iron ore miner FMG on a fast track to net-zero emissions by 2030. Achieving high speed on a rocky road will not be easy.

www.boilingcold.com.au

Forrest, FMG team dodge deadly terrorist attack

Australia's richest man, Andrew Forrest, was in Afghanistan when his key contact was targeted by terrorists who blew up 10 people.

www.afr.com

Sometimes I think Key man issues are over stated, especially where they have built a strong company culture.

Apple is bigger and stronger even though Steve is dead.

The Walt Disney company is far larger and stronger even though Walt Disney is dead.

Walmart continued growing after Sam died.

Mc Donald’s never stopped growing even though Ray Kroc died.
Every where you look there is examples of companies that have gone from strength to strength even after their founder passes away unexpectedly.

 

[Value Collector]

I think more of a worry for FMG, is if the top end of town is expected to repair the budget, the banks already have a surcharge tax.
So really Twiggy getting taken by a shark, or being run over by a bus, is probably less of an issue IMO.

Ben Graham mentions in the 1940 edition of Security Analysis that extraordinary profit margins can not last forever, either competition will step in and erode it, or government will step in with special taxes, I read that just as the the mining super taxes were being considered and I couldn’t believe how right he was.

 

[sptrawler]

Ben Graham mentions in the 1940 edition of Security Analysis that extraordinary profit margins can not last forever, either competition will step in and erode it, or government will step in with special taxes, I read that just as the the mining super taxes we being considered and I couldn’t believe how right he was.

Absolutely.
Profits are fleeting, taxes should be able to stand on a sustainable footing, not be applied just because a commodity has its time in the sun IMO.
Nickel would be a good example of that, it has very high recovery and exploration costs, they shouldn't just throw a tax on it because it has a great 3 year run as happened in mid 2010 era.
It would be far better IMO, to benchmark Australian nickel against competing countries and when all things are considered apply a tax on volume, if appropriate when everything is considered.
It shouldn't stifle exploration or profitability, but should take a cut due to it being a finite resource or it having an advantage due to low extraction costs. Eventually both of those come to an end, so selling it at near cost, doesn't in any way help Australia.
Just my thoughts.

 

[divs4ever]

I think more of a worry for FMG, is if the top end of town is expected to repair the budget, the banks already have a surcharge tax.
So really Twiggy getting taken by a shark, or being run over by a bus, is probably less of an issue IMO.

yes , State and Federal Governments seeing a pot of money IS a large risk ( and an ongoing disaster at that ) Twiggy today , Gina next week and then a crack at BHP and RIO ( and others )

 

[divs4ever]

Absolutely.
Profits are fleeting, taxes should be able to stand on a sustainable footing, not be applied just because a commodity has its time in the sun IMO.
Nickel would be a good example of that, it has very high recovery and exploration costs, they shouldn't just throw a tax on it because it has a great 3 year run as happened in mid 2010 era.
It would be far better IMO, to benchmark Australian nickel against competing countries and when all things are considered apply a tax on volume, if appropriate when everything is considered.
It shouldn't stifle exploration or profitability, but should take a cut due to it being a finite resource or it having an advantage due to low extraction costs. Eventually both of those come to an end, so selling it at near cost, doesn't in any way help Australia.
Just my thoughts.

politicians only think until the next election while civil servants only plan for their retirement ( fund )

there may be long-term thinkers in Australia but i can tell two places they AREN'T ( with the possible exception of Peter Costello )

 

[sptrawler]

politicians only think until the next election while civil servants only plan for their retirement ( fund )

there may be long-term thinkers in Australia but i can tell two places they AREN'T ( with the possible exception of Peter Costello )

The best thing Costello did was to start the future fund and step down from politics to run it.
An understated legend of our time, history will give him credit, one of our best treasurer's IMO.
If he had become PM, it would have been a poison chalice.

 

[divs4ever]

that Future Fund gig isn't so easy now either , too many trough-feeders cashing in early , will be interesting to see if the retirees break it completely

 

[Value Collector]

Absolutely.
Profits are fleeting, taxes should be able to stand on a sustainable footing, not be applied just because a commodity has its time in the sun IMO.
Nickel would be a good example of that, it has very high recovery and exploration costs, they shouldn't just throw a tax on it because it has a great 3 year run as happened in mid 2010 era.
It would be far better IMO, to benchmark Australian nickel against competing countries and when all things are considered apply a tax on volume, if appropriate when everything is considered.
It shouldn't stifle exploration or profitability, but should take a cut due to it being a finite resource or it having an advantage due to low extraction costs. Eventually both of those come to an end, so selling it at near cost, doesn't in any way help Australia.
Just my thoughts.

Agreed, considering both royalties and company income tax are both based on percentages, taxes already increase as profits increase, so extra taxes I see as being nothing more than cash grabs, especially when you work out the average profitability through the cycle is not an “extraordinary profit” but just a decent return on capital.

 

[Value Collector]

The best thing Costello did was to start the future fund and step down from politics to run it.
An understated legend of our time, history will give him credit, one of our best treasurer's IMO.
If he had become PM, it would have been a poison chalice.

Also I think the government debt was paid off when he stepped down wasn’t it?

 

[Humid]

Got a good price for that gold too

 

[divs4ever]

Also I think the government debt was paid off when he stepped down wasn’t it?

am not sure on that , but am absolutely certain he left it in better condition than it is currently