Australian (ASX) Stock Market Forum

FMG - Fortescue Ltd

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Value Collector said:
How ever luckily the share market does exist, and owners of the company can sell their parcels of ownership to new owners when ever they want,
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Exactly. The primary funders, the ones who actually made the "capital allocation" decision can sell their shares into the secondary market.

Those shares can and do circulate infinitely until retired. But secondary investors shouldn't fool themselves into thinking they are making a capital allocation decision in the vein of planting a mango tree or whatever.

The tree is planted, all we do is haggle over the price.
 
InsvestoBoy said:
Exactly. The primary funders, the ones who actually made the "capital allocation" decision can sell their shares into the secondary market.

Those shares can and do circulate infinitely until retired. But secondary investors shouldn't fool themselves into thinking they are making a capital allocation decision in the vein of planting a mango tree or whatever.

The tree is planted, all we do is haggle over the price.
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Fortescue is continually making capital allocations with shareholders retained earnings, as I said each time the company earns money it has to make a decision to either pass it along to owners as a dividend or maybe a share buy back or to reinvest it in new projects.

The New growth projects being carried out now are being funded by the retained earnings that are being earned now, and reinvested on behalf of current investors.

The original tree is planted and bearing fruit, but the new trees that are being planted are funded by the retained earnings that belong to current shareholders, regardless of whether you bought your shares in the secondary market or not, you are constantly investing new funds via retained earnings.

we haggle over the price of what we want to buy or sell that company equity for, but that doesn’t mean we aren’t constantly investing new equity into growth projects.

Ask yourself this, can FMG carry out these growth projects if it paid shareholders 100% of their earnings as a dividend? The answer is a clear no, it relies on shareholders being willing to accept that part of their earnings is being retained at each reporting cycle.

And should be even more clear that FMG could not afford the growth projects if it had to return the initial capital to investors from its balance sheet, rather than have a new investor step in and take over the equity position and pay out the other investor.
 
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Twiggy has pulled the plug on his green hydrogen/renewable energy projects in Russia. This follows BP's exit and Norways decision to divest it's sovereign energy fund of Russian interests.

Twiggy also made a chilling observation about Vladimir Putin. If Russia is going to be turned around it won't be with Putin at the helm.

Mr Forrest said he had met with Mr Putin on previous trips to Moscow, and described him as someone who would not be rattled by Western sanctions.

"He's an incredibly intelligent person, not to be underestimated in any way. And tough, very tough," Mr Forrest said.

www.abc.net.au

Forrest pulls back on Russian investments, while BP may take $US25 billion hit to exit the country

Russia is being dealt more financial blows, with Australian billionaire Andrew Forrest pulling back on hydrogen investments there, while oil giant BP and Norway's sovereign wealth fund are also divesting from the country.
www.abc.net.au www.abc.net.au
 
Value Collector said:
The total project is $9 Billion, that includes solar farms, wind turbines and batteries.

it will offset more than just diesel, it will also offset natural gas usage, and once the project is fully complete it will produce more than energy than FMG require to run their mines, which means they will have excess electricity to sell to other miners to offset their diesel and natural gas, or produce hydrogen etc.

there are already electric utility companies building wind, solar and batteries on the east coast that are economically producing energy for the national grid, the mining companies in the Pilbara have higher energy costs than the grid so the same investments that make sense for the east coast grid make even more sense for the Pilbara.

not to mention that the thing will be built in stages, and each stage will prove the viability of the next stage, they don’t have to commit all at once, in fact they have already built solar into their network that’s running now, I would suggest that they are seeing the benefits of this and that is why they are going big with it.
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Have you read anywhere what the increased cost to operate will be... Have you read anywhere what the payoff will be for the $9M investment.
 
dat111 said:
Have you read anywhere what the increased cost to operate will be... Have you read anywhere what the payoff will be for the $9M investment.
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It shouldn’t increase operating costs it will lower operating costs because it will be offsetting diesel and gas, they know what they are doing, they already have two other solar projects going.

As I mentioned, if building solar, wind and batteries is viable in east coast markets where the electricity out put is being sold on to the market and competing with low cost coal power plants etc and still turning a profit, then it should be quite easy for them to compete with diesel fueled generators and gas power stations in the Pilbara.

A wind or solar farm on the east coast can operate between 8%-12% return on capital invested, and that’s when the electricity is just sold into the grid at east coast market prices.

But the price paid to run diesel generators is much higher than the east coast grid average wholesale prices, so the return on investment would be higher than the 8%-12%

Not to mention that if the electricity ends up being converted into other green fuels etc in the future.
 
Onl
Smurf1976 said:
Wow.

I knew Forrest had some influence, didn't think it was to the extent he'd get a meeting with Putin though.

I wonder if he had to shout across that really long table? :2twocents
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Only if he refuses to get tested in case Putin steals his DNA....as Macron did ROL
 
New announcement from FMG on completion of the WAE purchase and development of a Zero Emission "Infinity Train"

Basically an electric train that scavenges all the down hill momentum of the ore trains and substantially reduce the need for renewable energy input.

ZERO EMISSION INFINITY TRAIN.

WAE has significant industrial battery technology that has already added considerable value to Fortescue. FFI and WAE have also commenced development of a regenerating battery electric iron ore train project (Infinity Train) to support the delivery of Fortescue’s industry-leading target to achieve net zero Scope 1 and Scope 2 emissions by 2030. In a world first development, the Infinity Train will utilise the gravitational energy generated on the downhill loaded sections of Fortescue’s rail network to recharge its battery electric systems, without any additional charging requirements for the return trip to reload.

The self-sustaining system will increase operational efficiency, lower maintenance costs, and eliminate diesel and the associated CO2 emissions from Fortescue’s iron ore trains. The regenerative capability will remove the requirement for investment in recharging infrastructure and additional renewable energy generation capacity.

Fortescue’s current rail operations include 54 operating locomotives that haul 16 train sets, together with other on-track mobile equipment. Each train set is about 2.8 kilometres in length and has the capacity to haul 34,404 tonnes of iron ore in 244 ore cars. Fortescue’s rail operations consumed 82 million litres of diesel in financial year 2021 accounting for 11 per cent of Fortescue’s Scope 1 emissions. This diesel consumption and associated emissions will be eliminated once the Infinity Train is fully implemented across Fortescue’s operations, significantly contributing to Fortescue’s target to be diesel free by 2030.

Fortescue’s studies and development costs for the Infinity Train are expected to be US$50 million over the next two years and will be classified as operating cost efficiencies, with the studies to refine the capital estimate and schedule. The technology, to be jointly developed by Fortescue and WAE, will address the reduction in emissions in the hard to abate heavy industry sector with significant opportunities for this technology to be commercialised on a global basis.

WAE Completion and Infinity Train
 
basilio said:
New announcement from FMG on completion of the WAE purchase and development of a Zero Emission "Infinity Train"

Basically an electric train that scavenges all the down hill momentum of the ore trains and substantially reduce the need for renewable energy input.

ZERO EMISSION INFINITY TRAIN.

WAE has significant industrial battery technology that has already added considerable value to Fortescue. FFI and WAE have also commenced development of a regenerating battery electric iron ore train project (Infinity Train) to support the delivery of Fortescue’s industry-leading target to achieve net zero Scope 1 and Scope 2 emissions by 2030. In a world first development, the Infinity Train will utilise the gravitational energy generated on the downhill loaded sections of Fortescue’s rail network to recharge its battery electric systems, without any additional charging requirements for the return trip to reload.

The self-sustaining system will increase operational efficiency, lower maintenance costs, and eliminate diesel and the associated CO2 emissions from Fortescue’s iron ore trains. The regenerative capability will remove the requirement for investment in recharging infrastructure and additional renewable energy generation capacity.

Fortescue’s current rail operations include 54 operating locomotives that haul 16 train sets, together with other on-track mobile equipment. Each train set is about 2.8 kilometres in length and has the capacity to haul 34,404 tonnes of iron ore in 244 ore cars. Fortescue’s rail operations consumed 82 million litres of diesel in financial year 2021 accounting for 11 per cent of Fortescue’s Scope 1 emissions. This diesel consumption and associated emissions will be eliminated once the Infinity Train is fully implemented across Fortescue’s operations, significantly contributing to Fortescue’s target to be diesel free by 2030.

Fortescue’s studies and development costs for the Infinity Train are expected to be US$50 million over the next two years and will be classified as operating cost efficiencies, with the studies to refine the capital estimate and schedule. The technology, to be jointly developed by Fortescue and WAE, will address the reduction in emissions in the hard to abate heavy industry sector with significant opportunities for this technology to be commercialised on a global basis.

WAE Completion and Infinity Train
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Twiggy has always been ahead of the curve.

Other companies in the Materials sector are watching his moves carefully.

Proper ESG rather than the present lip-service from lightweight sectors will start in our ore mines and energy companies.

gg
 
the narrative .... starting to seem even less credible than RBA inflation rate predictions ( maybe i will see the tooth fairy before to RBA gets the next guess correct )
 
narratives like the economy is fine ( except for those nasty Russians and their hundreds of tonnes of gold ) narratives like human energy use is killing the planet ( outside of war-time activities ) etc , etc , etc
 
divs4ever said:
narratives like the economy is fine ( except for those nasty Russians and their hundreds of tonnes of gold ) narratives like human energy use is killing the planet ( outside of war-time activities ) etc , etc , etc
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Ok, I still don’t quite understand what you are talking about.

but anyway, FMG’s “Infinity Train” will be an electric train that never needs charging, because as it’s travelling down hill from the mine to the port fully loaded it will generate more electricity via regen braking, than it will consume on the return in hill trip when the wagons are empty.

this concept has already been done with a mining truck in Switzerland as shown in the video I linked below, FMG is basically going to be doing this same principle but with trains.

 
Value Collector said:
It shouldn’t increase operating costs it will lower operating costs because it will be offsetting diesel and gas, they know what they are doing, they already have two other solar projects going.

As I mentioned, if building solar, wind and batteries is viable in east coast markets where the electricity out put is being sold on to the market and competing with low cost coal power plants etc and still turning a profit, then it should be quite easy for them to compete with diesel fueled generators and gas power stations in the Pilbara.

A wind or solar farm on the east coast can operate between 8%-12% return on capital invested, and that’s when the electricity is just sold into the grid at east coast market prices.

But the price paid to run diesel generators is much higher than the east coast grid average wholesale prices, so the return on investment would be higher than the 8%-12%

Not to mention that if the electricity ends up being converted into other green fuels etc in the future.
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OK it will not increase operating costs because it will be a capital expenditure that has to be paid back. How long will it take to pay back the capital expenditure. In the US I have studied wind and solar. The government has been funding these projects since the early 00s. It is government money grab done as crony capitalism where the wind and solar companies do OK when the government pumps money into them. When the government does not pump money into them... they declare bankruptcy and stick the citizens. If these companies could truly make money and be sustainable... they would not declare bankruptcy when the government stops handing checks.
 
dat111 said:
OK it will not increase operating costs because it will be a capital expenditure that has to be paid back. How long will it take to pay back the capital expenditure. In the US I have studied wind and solar. The government has been funding these projects since the early 00s. It is government money grab done as crony capitalism where the wind and solar companies do OK when the government pumps money into them. When the government does not pump money into them... they declare bankruptcy and stick the citizens. If these companies could truly make money and be sustainable... they would not declare bankruptcy when the government stops handing checks.
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As I said they will produce about 8%-12% minimum return on investment probably higher when you factor in the expensive energy sources they are replacing they are assets with 20 to 30 year life cycles.

“Pay back period” is not really the right way to be thinking about it, think of it more in terms of return on invested capital and return on equity.

Also there is energy security, when diesel prices spike like they are now, the projects internal rate of return goes up, because the savings relative to the price you would have had to pay for energy had you stuck to traditional energy sources goes up, there is also inflation hedging, eg you build your project today, and as inflation raises the price of oil, your investment you made 10 years ago looks like it’s producing an amazing return vs what you would be paying otherwise.

Big renewable projects can also qualify for accelerated tax write offs etc, which means you can write the cost of the project off and pay less taxes in the short term.
 

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