FMG - Fortescue Ltd

[Garpal Gumnut]

Quite a good article for the constipated commenters on FMG and off topic matters on ASF.

Basically a summary of my thoughts on Twiggy Forrest's attempts to be a new age Renewable guru and run an Iron Ore company at the same time.

The turnover of executives of supposed high quality is quite high at FFI, the Hydrogen arm of FMG.

The Chinese Circus looks like it will not be opening for any New Year over the next 12 months.

Whither FMG ?

Behind Fortescue’s executive revolving door

In the cult of Andrew Forrest not all disciples who sign on can operate under this messianic leader or within its governance structure.

www.brisbanetimes.com.au

gg

 

[basilio]

Quite a good article for the constipated commenters on FMG and off topic matters on ASF.

Basically a summary of my thoughts on Twiggy Forrest's attempts to be a new age Renewable guru and run an Iron Ore company at the same time.

The turnover of executives of supposed high quality is quite high at FFI, the Hydrogen arm of FMG.

The Chinese Circus looks like it will not be opening for any New Year over the next 12 months.

Whither FMG ?

Behind Fortescue’s executive revolving door

In the cult of Andrew Forrest not all disciples who sign on can operate under this messianic leader or within its governance structure.

www.brisbanetimes.com.au

gg

Yeah . No surprises in Elizabeth Knights discussion re Twiggys dominant role in FMG/FFI.

Twiggy owns 37% of FMG. He also drives it's operations and direction. He pushes his staff to extremes and exhaustion. It is pretty autocratic.

The new (additional...) direction of FMG is pure Twiggy. IMV it is largely driven by his view that unless Carbon emissions are dramatically reduced CC will effectively destroy our current society. Some people might think that is extreme. However almost every climate scientist would concur. Twiggy has this knowledge in his knapsack.

He sees "his" FMG as having the capacity and financial self interest to make a radical contribution to reducing carbon emissions in heavy industry. So he has constructed FFI, financed it through FMG and is driving it relentlessly to achieve what most observers would say is an impossible outcome.

This discussion has been made many times on this thread. FMG will gain substantial return on investment and value from reducing fossil fuel costs. Achieving the bigger objectives will take enormous energy and some very calculated technological decisions. Finding and holding the management team to make this happen could well be the Achilles heel of the project. I sincerely hope Twiggy gets the balance right. But boldness, vision and money are big drivers.

Having said that I think the iron ore operations will still power on and continue to make FMG a profitable concern. As they must. Hopefully there will still be sufficient oversight of these operations to ensure the best commercial outcome.

 

[Value Collector]

So he has constructed FFI, financed it through FMG and is driving it relentlessly to achieve what most observers would say is an impossible outcome.

As a great man once said “it’s kinda fun to do the impossible”.

History is full of people that did what other people thought was impossible, and made the world better doing it.

 

[Garpal Gumnut]

Yeah . No surprises in Elizabeth Knights discussion re Twiggys dominant role in FMG/FFI.

Twiggy owns 37% of FMG. He also drives it's operations and direction. He pushes his staff to extremes and exhaustion. It is pretty autocratic.

The new (additional...) direction of FMG is pure Twiggy. IMV it is largely driven by his view that unless Carbon emissions are dramatically reduced CC will effectively destroy our current society. Some people might think that is extreme. However almost every climate scientist would concur. Twiggy has this knowledge in his knapsack.

He sees "his" FMG as having the capacity and financial self interest to make a radical contribution to reducing carbon emissions in heavy industry. So he has constructed FFI, financed it through FMG and is driving it relentlessly to achieve what most observers would say is an impossible outcome.

This discussion has been made many times on this thread. FMG will gain substantial return on investment and value from reducing fossil fuel costs. Achieving the bigger objectives will take enormous energy and some very calculated technological decisions. Finding and holding the management team to make this happen could well be the Achilles heel of the project. I sincerely hope Twiggy gets the balance right. But boldness, vision and money are big drivers.

Having said that I think the iron ore operations will still power on and continue to make FMG a profitable concern. As they must. Hopefully there will still be sufficient oversight of these operations to ensure the best commercial outcome.

I believe the reason behind executives and key people leaving is that they are expected to follow Twiggy's brainfarts and are unable to have their feedback acknowledged.

I have spoken to many engineers who say Hydrogen is a no go.

The people leaving are high quality talent who may see that the writing is on the wall for Hydrogen as an alternative fuel and that it is all Mickey Mouse, in deference to @Value Collector.

I'm not trying to pour Olive Oyle on your expectations of Twiggy @basilio but it is a fairly big bet he is making in an unforgiving casino.

gg

 

[rcw1]

Good evening Friday nighters...

It Couldn’t Be Done​

BY EDGAR ALBERT GUEST

Somebody said that it couldn’t be done
But he with a chuckle replied
That “maybe it couldn’t,” but he would be one
Who wouldn’t say so till he’d tried.
So he buckled right in with the trace of a grin
On his face. If he worried he hid it.
He started to sing as he tackled the thing
That couldn’t be done, and he did it!

Somebody scoffed: “Oh, you’ll never do that;
At least no one ever has done it;”
But he took off his coat and he took off his hat
And the first thing we knew he’d begun it.
With a lift of his chin and a bit of a grin,
Without any doubting or quiddit,
He started to sing as he tackled the thing
That couldn’t be done, and he did it.

There are thousands to tell you it cannot be done,
There are thousands to prophesy failure,
There are thousands to point out to you one by one,
The dangers that wait to assail you.
But just buckle in with a bit of a grin,
Just take off your coat and go to it;
Just start in to sing as you tackle the thing
That “cannot be done,” and you’ll do it.

 

[basilio]

I believe the reason behind executives and key people leaving is that they are expected to follow Twiggy's brainfarts and are unable to have their feedback acknowledged.

I have spoken to many engineers who say Hydrogen is a no go.

The people leaving are high quality talent who may see that the writing is on the wall for Hydrogen as an alternative fuel and that it is all Mickey Mouse, in deference to @Value Collector.

I'm not trying to pour Olive Oyle on your expectations of Twiggy @basilio but it is a fairly big bet he is making in an unforgiving casino.

gg

After almost 70 years I have given up on saying what can't be done. Probably they most powerful experience I have had as a teacher was working with Year 4 students, - 10 year olds, who didn't know what "couldn't be done" in their school - and then just did it.

I have also seen many projects conceived and executed that were thought impossible but ended up successful. Drive , determination, flexibility, creativity all played their part. I'm quite sure that experience would also be common with many people.

Will green Hydrogen be (part of ) the solution to decarbonising heavy industry and tackling global warming ? Who knows ? One thing we can be absolutely certain of is that not having a red hot go at the issue of decarbonising our world will result in catastrophe. That is a certainty.

Let's hope for everyones sake that, one way or another, Twiggy, FMG and FFI are successful in some way with the quest. You can't let the perfect get in the way of the good.

 

[Value Collector]

.

I'm not trying to pour Olive Oyle on your expectations of Twiggy @basilio but it is a fairly big bet he is making in an unforgiving casino.

gg

I don’t think it is as big of a gamble as you would imagine.

Only 10% of their profits are dedicated to FFI, so that alone makes it a minor bet. But then you have the fact that of that 10% a chunk of it is being used just to build solar and wind power generation which is low risk stuff that even if the hydrogen never works will still be valuable. Then you have the conversion of diesel equipment to battery electric that’s pretty low risk too.

It’s only really the final stage which is producing the hydrogen that could be considered risky, but even parts of that plan is not super high risk, I mean there is multi pathways they are exploring to monetise the hydrogen.

But as I said even if hydrogen plan doesn’t work we get left with a bunch of renewable electricity generation and batteries.

 

[Value Collector]

, I mean there is multi pathways they are exploring to monetise the hydrogen.

I just realised there is another potential pathway to consume hydrogen that is very important in WA.

Hydrogen in the form of Ammonium Nitrate is a main ingredient in explosives, and The mining and quarrying industry consumes a lot of explosives in WA. There an already Ammonium Nitrate plants in WA that produce 100’s of thousands of tonnes of Ammonia for the explosive market (and over 1 Million tonnes for fertiliser exports).

With WA’s large Iron ore, Gold and nickel mining SA’s copper mines and both states future growth in Battery minerals mining there is a large steady demand for explosives.

The fertiliser and explosives markets will probably be interested in moving to green hydrogen too.

 

[sptrawler]

I don’t think it is as big of a gamble as you would imagine.

Only 10% of their profits are dedicated to FFI, so that alone makes it a minor bet. But then you have the fact that of that 10% a chunk of it is being used just to build solar and wind power generation which is low risk stuff that even if the hydrogen never works will still be valuable. Then you have the conversion of diesel equipment to battery electric that’s pretty low risk too.

It’s only really the final stage which is producing the hydrogen that could be considered risky, but even parts of that plan is not super high risk, I mean there is multi pathways they are exploring to monetise the hydrogen.

But as I said even if hydrogen plan doesn’t work we get left with a bunch of renewable electricity generation and batteries.

I agree with you VC, if global warming is being caused by carbon emissions, eventually H2 and nuclear will have to do the heavy lifting, so it isn't unreasonable to think that FFI will eventually be a major contributor to FMG's bottom line.
Being a one trick pony, relying solely on iron ore, is a riskier route to take IMO.
The world is changing at a hell of a pace and not thinking outside the box, is leaving a lot of companies stranded.
The legacy car companies are a current example of it, last generation Nokia and Kodak were examples of companies that dug in and tried to ride out the change.
Adapting to change, is a far less risky strategy, than hoping things will stay the same.
Twiggy leading the charge, will get a lot of opportunities/subsidies and joint ventures, that wont be available at a later date.
Somewhat like early adopters of rooftop solar, many said it was a waste of money, well after 12 years I can tell you it wasn't.

 

[basilio]

I just realised there is another potential pathway to consume hydrogen that is very important in WA.

Hydrogen in the form of Ammonium Nitrate is a main ingredient in explosives, and The mining and quarrying industry consumes a lot of explosives in WA. There an already Ammonium Nitrate plants in WA that produce 100’s of thousands of tonnes of Ammonia for the explosive market (and over 1 Million tonnes for fertiliser exports).

With WA’s large Iron ore, Gold and nickel mining SA’s copper mines and both states future growth in Battery minerals mining there is a large steady demand for explosives.

The fertiliser and explosives markets will probably be interested in moving to green hydrogen too.

FFI always identified the fertiliser and ammonium nitrate market as important users/markets of green hydrogen.

FFI and Incitec Pivot progress green conversion of Gibson Island ammonia facility

Fortescue Future Industries (FFI) and Incitec Pivot Limited (IPL) will progress planning for the conversion of IPL’s Gibson Island ammonia facility to run on green hydrogen to its final stages.

www.fmgl.com.au

Fortescue Future Industries to join forces with the Government of Kenya to eliminate fossil fuels from Kenya's fertiliser supply chain | Fortescue Metals Group Ltd

www.fmgl.com.au

 

[rcw1]

Good afternoon
Published this afternoon (29/11/22):

Fortescue Metals Group taps Woodside operations vice president Fiona Hick as chief executive of its mining arm, almost a year after former boss Elizabeth Gaines announced her intention to leave the company’s top job.
Ms Hick is a 21-year veteran at Woodside and will commence as chief executive officer of Fortescue Metals in February. She last worked in iron ore with Rio Tinto as a rail superintendent in 2001 and recently been Woodside’s operations vice president since 2019, and before that briefly served as its strategy and planning boss, and before that as its crisis management leader.Ms Gaines announced her intention to stand down as the Fortescue chief executive on December 10 2021, but remained on until August as the company hunted for a successor.

In May Fortescue founder Andrew Forrest said he would become the company’s executive chairman, taking on the role of running its iron ore division as being the figurehead and driving force behind its green energy subsidiary, Fortescue Future Industries. As recently as last week, at Fortescue’s annual shareholder meeting, Dr Forrest said he was in “no hurry” to find a replacement. Since then the company has been hit by the departure of FFI chief financial officer Guy Debelle after only months in the role, capping a year that has seen substantial turnover in the top ranks of the iron ore major.


Have a very nice evening.

Kind regards
rcw1

 

[basilio]

I agree with you VC, if global warming is being caused by carbon emissions, eventually H2 and nuclear will have to do the heavy lifting, so it isn't unreasonable to think that FFI will eventually be a major contributor to FMG's bottom line.
Being a one trick pony, relying solely on iron ore, is a riskier route to take IMO.
The world is changing at a hell of a pace and not thinking outside the box, is leaving a lot of companies stranded.
The legacy car companies are a current example of it, last generation Nokia and Kodak were examples of companies that dug in and tried to ride out the change.
Adapting to change, is a far less risky strategy, than hoping things will stay the same.
Twiggy leading the charge, will get a lot of opportunities/subsidies and joint ventures, that wont be available at a later date.
Somewhat like early adopters of rooftop solar, many said it was a waste of money, well after 12 years I can tell you it wasn't.

IMO probably one of the most succinct and accurate analysis of FMG and the rationale for it's strong FFI venture yet posted.

Only additional point worth noting is recognising that Twiggy deliberately created a separate FFI entity to protect FMG's main current operations from possible fallout if FFI went seriously pear shaped.

 

[basilio]

FMG climbing steeply today. Currently up 5.6%.

Iron ore price has jumped from $92.50 to $107.44 in the last 1-2 days. If this holds or improves FMG profits will jump substantially

Iron Ore PRICE Today | Iron Ore Spot Price Chart | Live Price of Iron Ore per Ounce | Markets Insider

Iron Ore Price: Get all information on the Price of Iron Ore including News, Charts and Realtime Quotes.

markets.businessinsider.com

 

[UMike]

Yea Gone way above my target price..
Put an extra dollar on it. will reevaluate tomorrow I guess.

 

[divs4ever]

Yea Gone way above my target price..
Put an extra dollar on it. will reevaluate tomorrow I guess.

i got mine ( target price )

i am GONE

i invested in a iron miner not to throw cash all around the world for various agendas

 

[wayneL]

i got mine ( target price )

i am GONE

i invested in a iron miner not to throw cash all around the world for various agendas

There are some interesting smaller players.

FMG as a ticker symbol has a lot to like from my perspective, volume and optionability specifically, but the issues highlight won't have me putting any scrip in the bottom drawer.

 

[basilio]

i got mine ( target price )

i am GONE

i invested in a iron miner not to throw cash all around the world for various agendas

That is interesting. I was under the impression that you valued FMG for its iron ore mining and the probability of ongoing $2 a year dividends from your investment in it.

I thought you saw the small(10%) portion of its profits that were used to seed FFI as an exercise in developing a new arm to their business. But that as long as the iron ore component stayed effective and profitable you would keep getting the cheques.

Was I mistaken or have you changed your view on entire operation ?

 

[divs4ever]

That is interesting. I was under the impression that you valued FMG for its iron ore mining and the probability of ongoing $2 a year dividends from your investment in it.

I thought you saw the small(10%) portion of its profits that were used to seed FFI as an exercise in developing a new arm to their business. But that as long as the iron ore component stayed effective and profitable you would keep getting the cheques.

Was I mistaken or have you changed your view on entire operation ?

yes i WAS , but am seeing all these peripheral investments and partnerships , in a market of increasing uncertainty ( for instance we look like we are heading for a substantial trade war with China )

i might be wrong in my move just like when i held MTS and left in a hurry

if this was ( similar ) to March 2020 and the market was deciding between a bottom and another leg down .. i would have only reduced

but this feels ( to me ) like climbing a wall of worry

i see a government starting to behave like that of current Germany i would rather have exited VUK as well but probably won't get near the target


i still hold GRR and MGX ( as well as BHP ) as iron exposure

but i feel an ill wind coming ( just like January 2020 )

now best of luck to Twiggy and the holders , but it looks like i will have to spend most of Christmas looking for alternative investments ( and targets )

 

[basilio]

yes i WAS , but am seeing all these peripheral investments and partnerships , in a market of increasing uncertainty ( for instance we look like we are heading for a substantial trade war with China )

i might be wrong in my move just like when i held MTS and left in a hurry

if this was ( similar ) to March 2020 and the market was deciding between a bottom and another leg down .. i would have only reduced

but this feels ( to me ) like climbing a wall of worry

i see a government starting to behave like that of current Germany i would rather have exited VUK as well but probably won't get near the target


i still hold GRR and MGX ( as well as BHP ) as iron exposure

but i feel an ill wind coming ( just like January 2020 )

now best of luck to Twiggy and the holders , but it looks like i will have to spend most of Christmas looking for alternative investments ( and targets )

Well you certainly made a dollar on your deal. I can recognise your concerns and yes if one believed the whole world economy was facing a grim future I struggle to see what stock investments would make sense.

I have to say I am very split. I suppose I believe that my few investments represent areas that will be required, are well run (I hope) and forward looking. Taking FMG in particular IMV if iron ore prices and sales volume fell to the point that it was unprofitable then Australia as a whole would be an absolute disaster. Such a scenario would be reflected across the whole mining sector and would result in the undermining of a huge part of our national income.

 

[divs4ever]

Well you certainly made a dollar on your deal. I can recognise your concerns and yes if one believed the whole world economy was facing a grim future I struggle to see what stock investments would make sense.

I have to say I am very split. I suppose I believe that my few investments represent areas that will be required, are well run (I hope) and forward looking. Taking FMG in particular IMV if iron ore prices and sales volume fell to the point that it was unprofitable then Australia as a whole would be an absolute disaster. Such a scenario would be reflected across the whole mining sector and would result in the undermining of a huge part of our national income.

one of my flaws ( strengths ?? ) i can be very fickle ( at unusual times )

sadly i much would have preferred to swap straight into another investment ( like my BKL into WES deal )

grim , i can handle but multiple uncertainties is very different , for instance if Australia had a sizable manufacturing sector ( to use that coal/iron/copper in Australian goods ) i might have waited longer

interestingly a disaster in the mining sector would probably seal the fate of the ALP as well ( even the QLD Premier understands that )

Australia has some very low cost miners currently BUT those margins tempt cash-strapped governments , costs and complexity could explode

and to make it worse Albo seems to be duty-bound to annoy China ( when China has options , even if they are second rate ones )

problem two if it was just Australia v. China that is bad enough , but other places have big problems as well ( cash , power , transport etc etc ) suddenly the global market is not a placid lake