FMG - Fortescue Ltd

[mullokintyre]

I'm sure many people on ASF have been familiar with leaders like this. It isn't a safe process. It isn't comfortable. But it is exciting. It can produce outstanding results. Elon Musk and Tesla come to mind as an example of such an approach.

However I suggest that whatever happens with FFI, the meat and potatoes element of FMG (iron ore) will still be making a ton of money for years to come. At the very minimum the renewable energy projects that strip out hundreds of millions of dollars in operating costs will be effective and enhance the profitability of iron ore sales. These will not go away. If people are looking for a narrative this ongoing element of the company underpins the financial returns investors can realistically bank on.

The FFI component will add substantial value to these operations as noted and could evolve to the vision Twiggy envisages.

All that is true, but for every Elon Musk ad TSLA there are a lot more failures like Trevor Milton and Nikola, or Adrian Nueman and WeWork, or as locally with Ralph Sarich and the orbital Engine co.
Mick

 

[divs4ever]

The reality is that Twiggy owns 37% of FMG and is for all intents and purposes the driver of the direction and processes in FMG.

He is determined to move heaven and earth to make renewable energy the future cornerstone of the company and at the very least make a healthy profit. ( Frankly I can't see how any project short of printing money can be more profitable than mining 180m tones of iron ore a year at $17$ a ton and selling it for the prices they were getting last year.) In that context he will create totally unrealistic deadlines and his employees will have to somehow produce results.

I'm sure many people on ASF have been familiar with leaders like this. It isn't a safe process. It isn't comfortable. But it is exciting. It can produce outstanding results. Elon Musk and Tesla come to mind as an example of such an approach.

However I suggest that whatever happens with FFI, the meat and potatoes element of FMG (iron ore) will still be making a ton of money for years to come. At the very minimum the renewable energy projects that strip out hundreds of millions of dollars in operating costs will be effective and enhance the profitability of iron ore sales. These will not go away. If people are looking for a narrative this ongoing element of the company underpins the financial returns investors can realistically bank on.

The FFI component will add substantial value to these operations as noted and could evolve to the vision Twiggy envisages.

now i know i sound like a 'doom merchant ' but i see iron demand ( exports from Australia ) declining from various angles

1. the natural downturn in the mining super cycle ( symptomatic of a slowing global economy )

2. an ever-warming up of a war with China ( the trade war first , maybe a hot war later )

3. rising costs in Australia , possibly offsetting a sliding Aussie sliding dollar

4. the return of Vale iron projects to full production

5. iron projects from less developed regions ( like Mongolia and Africa ) coming into full production

i would prefer that FMG not get too impatient pushing the 'green projects ' and perhaps starving the iron/port infrastructure of timely maintenance ( but i suppose if FMG keeps too much in cash reserves , some shareholders will agitate for increased divs and buy-backs )

 

[basilio]

now i know i sound like a 'doom merchant ' but i see iron demand ( exports from Australia ) declining from various angles

1. the natural downturn in the mining super cycle ( symptomatic of a slowing global economy )

2. an ever-warming up of a war with China ( the trade war first , maybe a hot war later )

3. rising costs in Australia , possibly offsetting a sliding Aussie sliding dollar

4. the return of Vale iron projects to full production

5. iron projects from less developed regions ( like Mongolia and Africa ) coming into full production

i would prefer that FMG not get too impatient pushing the 'green projects ' and perhaps starving the iron/port infrastructure of timely maintenance ( but i suppose if FMG keeps too much in cash reserves , some shareholders will agitate for increased divs and buy-backs )

All that is true, but for every Elon Musk ad TSLA there are a lot more failures like Trevor Milton and Nikola, or Adrian Nueman and WeWork, or as locally with Ralph Sarich and the orbital Engine co.
Mick

Trevor Milton was a deceitful dangerous crook. He nearly took GM down with him
The We Work fiasco was another creative scam
Ralph Sarich I agree was an excellent engineer with a great product. From what I remember the great promise of the orbital engine never came off but he did make a tidy business.

Yes there are many Big names in business who failed or were cheats. I suggest that Andrew Forrest has firmly made his reputation for business audacity, engineering skills and corporate drive with his FMG success. No doubt there many elements one could be critical of but if one was trying to back a corporate horse I think he has good form.

With regard to the risks facing FMG continuing iron ore success. I totally agree. All of these factors may well substantially impinge on the future profitability of FMG. I would be confident that Twiggy would also acknowledge these issues.

IMV I believe these factors are an important reason behind Twiggys determination to widen FMG's business base. One can't taken iron ore for granted . What's next ?

Essentially he sees renewable energy as the next big thing. More importantly he recognises that unless the world turns on a dime and rapidly decarbonises, CC will destroy everything. He doesn't bang on about this too much publicly because all the suits and bean counters are still in denial about what is happening and what will happen because of human caused global warming.

Twiggy gets it. He is a very real scientist as well as a businessman. He totally understands what is happening to our planet as result of the billions of tons of CO2 we pump into the atmosphere. The PhD Thesis he completed in 2019 was his deep dive education into how CC is destroying our oceans. I'm just glad he is putting his brains and our collective financial muscle into turning heavy industry on a dime in the next 10 years and maybe giving us a chance of not being toast.

Don't fall for 'quick sound bites' around clean energy sources, Fortescue chairman says

Politicians have to look beyond catchphrases like "clean hydrogen" and understand the research behind renewable energy sources, says Andrew Forrest.

www.cnbc.com

Postgraduate profiles: Full alphabetical listing > Research: The University of Western Australia

Postgraduate profiles

www.research.uwa.edu.au

 

[againsthegrain]

Have been watching and hoping VC will jump in sooner or later with some positive words ?

 

[Garpal Gumnut]

I just try and keep it simple with FMG.

1. Twiggy leads it.
2. The best predictor of future performance is past performance.
3. Once ole Comrade Xi opens up the Chinese circus again everyone will get a feed, from the carnie to every shareholder in commodities.
4. FFI is sexy, whether it delivers involves bromance, consummation, growth and much labour. If not just list on NASDAQ.
5. Iron rules.
6. Iron rules
7. Iron ...

gg

 

[qldfrog]

Have been watching and hoping VC will jump in sooner or later with some positive words ?

Of course he will, just some facts from me today

Énergie : ArcelorMittal va arrêter temporairement un de ses hauts-fourneaux de Fos-sur-Mer

La baisse de la demande d'acier et l'inflation touchant l'énergie poussent l'industriel à limiter son activité.

www.lefigaro.fr

Europe unable to carry on steel production: lower demand and exploding energy price...
Do not expect the Chinese foundry demand to be replaced by the EU

 

[qldfrog]

Andrew Forrest says big companies are 'forcing' customers to 'destroy the planet'

Australian mining magnate Andrew "Twiggy" Forrest has accused energy companies and businesses selling single-use plastics of forcing customers to "destroy the planet".

www.abc.net.au

Going full sail narrative..how much is FMG going to suck from our tax dollars.
There is no way Twiggy is believing that. So he is walking the line:
Either to be on the receiving end of our taxes , or the madness in power is such that he sees this as the only way an Aussie company can survive.

And while it is true plastic currently can only be recycled 3 tomes or so, it is just a matter of which plastic we use

How Many Times Can Plastic Be Recycled?

You would be forgiven for thinking that every time you throw a plastic bottle into the recycling, it will eventually be reincarnated as another plastic bottle. Unfortunately, that’s not quite how...

www.envirotech-online.com

So a choice..real science or the plastic straw scam
I would prefer Twiggy to push for science and technology more than parrotting the Greta line, but have to acknowledge it might be the wise business move.
Volkswagen did the right choice business wise in 1930s going with the Nazis as did Bayer BMW etc . The one which did not and objected are not here anymore.

 

[mullokintyre]

Andrew Forrest says big companies are 'forcing' customers to 'destroy the planet'

Australian mining magnate Andrew "Twiggy" Forrest has accused energy companies and businesses selling single-use plastics of forcing customers to "destroy the planet".

www.abc.net.au

Going full sail narrative..how much is FMG going to suck from our tax dollars.
There is no way Twiggy is believing that. So he is walking the line:
Either to be on the receiving end of our taxes , or the madness in power is such that he sees this as the only way an Aussie company can survive.

And while it is true plastic currently can only be recycled 3 tomes or so, it is just a matter of which plastic we use

How Many Times Can Plastic Be Recycled?

You would be forgiven for thinking that every time you throw a plastic bottle into the recycling, it will eventually be reincarnated as another plastic bottle. Unfortunately, that’s not quite how...

www.envirotech-online.com

So a choice..real science or the plastic straw scam
I would prefer Twiggy to push for science and technology more than parrotting the Greta line, but have to acknowledge it might be the wise business move.
Volkswagen did the right choice business wise in 1930s going with the Nazis as did Bayer BMW etc . The one which did not and objected are not here anymore.

And just to underscore that, according to the Evil murdoch press Forrest has been defending Chinas role in being the largest carbon Polluter on the planet.

Andrew Forrest has defended China, saying Beijing does “care about” what the West thinks of the country's “nightmare” track record of burning coal.

“Look, they absolutely do care. We're being caught in the crossfire between North America and China here … If we could have peaceful, mutual engagement, I think you would see China taking a more proactive stance,” the founder of Fortescue Metals Group told the ABC’s 7.30 program on Monday, the first day of the COP27 in Egypt.

“China is building coal-fired power stations. I'm desperate to try to stop them from doing that, but at this stage, I don't have the solution. I'm working feverishly … to get them solutions and so are other entrepreneurs in China.

“If people want to educate their kids or switch on the lights or turn on a hospital, then unfortunately they go to coal. That's our fault. We need to deliver the non-fossil fuel energy into them so we give them a choice.”

Yea, Nah. Sorry mate, but either we get rid of fossil fuels or we don't.
You cannot possibly pretend that CO@ emissions from Australia or Europe are somehow different or worse than those emitted from China. "The Science(TM)" does not work that way.
Mick

 

[divs4ever]

Of course he will, just some facts from me today

Énergie : ArcelorMittal va arrêter temporairement un de ses hauts-fourneaux de Fos-sur-Mer

La baisse de la demande d'acier et l'inflation touchant l'énergie poussent l'industriel à limiter son activité.

www.lefigaro.fr

Europe unable to carry on steel production: lower demand and exploding energy price...
Do not expect the Chinese foundry demand to be replaced by the EU

i am expecting the West to try to turn Africa into the 'manufacturing heart ' NWO ( keep the population under-educated and the land full of waste and pollution .. the main reason became the previous 'manufacturing heart ' ) , am not sure how much iron ore is in Africa but they have a fair bit of coal and oil ( and other base metals )

i think the West would have preferred India , but then India had a dose of European occupation several years back , and still remembers it , vividly

 

[divs4ever]

And just to underscore that, according to the Evil murdoch press Forrest has been defending Chinas role in being the largest carbon Polluter on the planet.

Yea, Nah. Sorry mate, but either we get rid of fossil fuels or we don't.
You cannot possibly pretend that CO@ emissions from Australia or Europe are somehow different or worse than those emitted from China. "The Science(TM)" does not work that way.
Mick

it does in 'Murdoch World ' i have worked there , ( rules for thee but not for me )

i have hours of riotous tales on 'safety ' alone

Twiggy has an easy task to look better than ' Murdoch World '

 

[Value Collector]

All that is true, but for every Elon Musk ad TSLA there are a lot more failures like Trevor Milton and Nikola, or Adrian Nueman and WeWork, or as locally with Ralph Sarich and the orbital Engine co.
Mick

The thing that separates FMG, is they aren’t just a cash burning IPO, they have a solid cash producing Iron Ore business.

Not to mention, they aren’t reinventing the wheel, a large portion of their move to renewables is low risk proven technology.

Eg,

1. Installing solar panels, wind turbines and batteries to reduce and eventually eliminate the need to burn diesel and natural gas to generate electricity for their operations is pretty straight forward.

2. Converting a bunch of ICE based trains and mining equipment to Battery electric or Hydrogen is still pretty low risk investment in the grand scheme of things.

When it comes to producing hydrogen for export, and electro fuels etc that is more speculative, but not totally off the charts and as I said in earlier posts, if the hydrogen stuff was a complete bust it’s not a 100% loss, because all the solar and wind installed for the hydrogen project can still be used to generate electricity for other purposes.

 

[Value Collector]

An interview with Andrew Forrest about renewable energy.

https://www.abc.net.au/news/2022-11-07/andrew-‘twiggy’-forrest-sets-the-record-straight/101626722

 

[Value Collector]

And just to underscore that, according to the Evil murdoch press Forrest has been defending Chinas role in being the largest carbon Polluter on the planet.

Yea, Nah. Sorry mate, but either we get rid of fossil fuels or we don't.
You cannot possibly pretend that CO@ emissions from Australia or Europe are somehow different or worse than those emitted from China. "The Science(TM)" does not work that way.
Mick

China’s emissions on a person basis is actually lower than America and Australia, so it can be a bit misleading to call them the biggest polluters, especially if you factor in that a lot of their energy use is used to export products we use, so the pollution is really attributable to us, and not them.

———————

But either way, China is also a leader in developing renewable energy too, they are moving in the direction of renewables too, it just takes time.

 

[martaart077]

Andrew Forrest is the useful idiot for China, doing China's bidding. He doesn't mind though as they give him lots of money for it. It's all business.

 

[martaart077]

China’s emissions on a person basis is actually lower than America and Australia, so it can be a bit misleading to call them the biggest polluters, especially if you factor in that a lot of their energy use is used to export products we use, so the pollution is really attributable to us, and not them.

———————

But either way, China is also a leader in developing renewable energy too, they are moving in the direction of renewables too, it just takes time.

Statistics can be misleading.
Environmental degradation and hellish living environments due to extreme levels of pollution are the norm in China. You can't imagine till you experience it first hand.

 

[divs4ever]

Andrew Forrest is the useful idiot for China, doing China's bidding. He doesn't mind though as they give him lots of money for it. It's all business.

i don't know about 'useful idiot' , with my dealings with Chinese , if you stick to your deals and are a reliable trading partner/customer things go very smoothly , BUT Chinese class haggling as a national sport , so if you want to play rough'n'tumble , they have strategies for that as well .( including zero-Covid policies , i suspect )

now sure i wished Twiggy had of diversified his customers ( some to South Korea , some to India , and some to China ) but maybe China made it less complicated doing business

and profit is what business is about ( making it efficiently without fuss is even better )

 

[Value Collector]

. You can't imagine till you experience it first hand.

Yes, that is one of the reasons we have exported our pollution there.
I am in no way trying to say china is an environmental wonderland, I am just pointing out that when some people try and use the excuse that "it is not worth us trying to lower emissions because china produces more than us", that is a bit of a fallacy.

Because when it comes to carbon emissions "per person" Both Australia and USA produce more, so it is definitely worth us trying to reduce.

its also not worth trying to demonise china about their emissions, because as I said they are trying to lower their intensity probably more so than us, but in the mean time the average Chinese person still wants heat, transport, employment etc etc.

I guess my main point in pointing fingers and having ultimatums about who should lower first is silly, we should just follow Twiggys lead and get it done, and make some money a long the way.

 

[SirRumpole]

The thing that separates FMG, is they aren’t just a cash burning IPO, they have a solid cash producing Iron Ore business.

Not to mention, they aren’t reinventing the wheel, a large portion of their move to renewables is low risk proven technology.

Eg,

1. Installing solar panels, wind turbines and batteries to reduce and eventually eliminate the need to burn diesel and natural gas to generate electricity for their operations is pretty straight forward.

2. Converting a bunch of ICE based trains and mining equipment to Battery electric or Hydrogen is still pretty low risk investment in the grand scheme of things.

When it comes to producing hydrogen for export, and electro fuels etc that is more speculative, but not totally off the charts and as I said in earlier posts, if the hydrogen stuff was a complete bust it’s not a 100% loss, because all the solar and wind installed for the hydrogen project can still be used to generate electricity for other purposes.

Twiggy is maybe the only person in the country with both the technical knowledge and business acumen to advance renewable energy for Australia. I just hope it doesn't end up like our coal and gas resources, all for export and stuff all for us.

Since Twiggy is into electric trains, maybe he should diversify into electric car production, so the Aussie masses can actually afford to buy one and not have to wait for years.

 

[Value Collector]

I just hope it doesn't end up like our coal and gas resources, all for export and stuff all for us.

Some thing I have thought about is whether a floor will form under the local electricity price.

For example we know that the ability to liquify and export natural gas has basically put a floor under the gas price and keeps gas prices high.

If producing hydrogen for export and synthetic jet fuels etc becomes a thing, it could put a floor under electricity prices.

This would be a great thing for owners of electricity infrastructure and stimulate huge amounts of new investment and jobs, but it could cause high electricity prices for a while.

Let’s say jet fuel sells for $2 a litre, and it takes 5 kWH of electricity to make a litre of jet fuel, this might mean that the companies running the electrolisers converting electricity to liquid jet fuel will buy as much electricity as they can at up to 30 cents per KWH, meaning households have to pay more.

 

[UMike]

If you bought on the Dip and Sold at open it'd be a nice little earner.