FMG - Fortescue Ltd

Value Collector said:

I think you could find an even longer list of fossil fuel companies that have gone bankrupt, think of all the oil and gas explorers, drillers companies etc even petrol stations etc

Just because you can find examples of bankruptcy in a given industry does not mean that the industry is destined for failure, look at the car industry as an example, I think there was 3000 car companies in the USA that went bankrupt in the first 50 years of the automobile, off course that didn't stop Tesla.

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Not to mention that most on your list are either installers which like builders will come and go, or companies trailing new tech which offcourse is fickle.

Neither is evidence that sound tried and tested green energy infrastructure is going anywhere, once its installed its basically free energy, its not like I am going to go and rip the solar panels up my roof just because interest rates go up or unemployment rises.

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I agree...that is why we need to question whether it is a good business... 1 in 100 make it or is it 1 in 500 or is it 1 in 5000... those are the odds of companies making it when the business is governed by free market capitalism. This is government backed/mandated/funded business oportunity that can only exist if the government wills it... The thought process of generating ammonia to be transferred around the world for its H2 doesn't make sense from a thermodynamic standpoint...

dat111 said:

I agree...that is why we need to question whether it is a good business... 1 in 100 make it or is it 1 in 500 or is it 1 in 5000... those are the odds of companies making it when the business is governed by free market capitalism. This is government backed/mandated/funded business oportunity that can only exist if the government wills it... The thought process of generating ammonia to be transferred around the world for its H2 doesn't make sense from a thermodynamic standpoint...

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I am not sure you understand what FMG is actually doing, and the order and time line they are actually doing it in.

1, The first step which they have been working on for a while is just building a bunch of solar, wind and batteries to connect to their mines so that they don’t have to rely on burning diesel and gas. This is risky it’s pretty straight forward and the investments will be cashflow positive.

2, the second step is to continue expanding the renewable electricity supply while simultaneously expanding the amount of their equipment that uses electricity, eg replacing diesel trucks, trains and other equipment with battery electric systems.

3, continue expanding the renewable electricity supply while simultaneously installing hydrogen electrolisers, and diverting the extra electricity to the hydrogen production and finding various ways to monetise that hydrogen, eg hydrogen powered equipment, fertiliser and explosive production, ammonia based fuels for their ships, export etc etc.

As I have said here before, some of the hydrogen plans might not work out, but their is multiple pathways to hydrogen monetisation in the works, and even if hydrogen is a complete failure, all is not lost because we still have all that renewable infrastructure that we can use for our own consumption and also sell to the grid.

Value Collector said:

I am not sure you understand what FMG is actually doing, and the order and time line they are actually doing it in.

1, The first step which they have been working on for a while is just building a bunch of solar, wind and batteries to connect to their mines so that they don’t have to rely on burning diesel and gas. This is risky it’s pretty straight forward and the investments will be cashflow positive.

2, the second step is to continue expanding the renewable electricity supply while simultaneously expanding the amount of their equipment that uses electricity, eg replacing diesel trucks, trains and other equipment with battery electric systems.

3, continue expanding the renewable electricity supply while simultaneously installing hydrogen electrolisers, and diverting the extra electricity to the hydrogen production and finding various ways to monetise that hydrogen, eg hydrogen powered equipment, fertiliser and explosive production, ammonia based fuels for their ships, export etc etc.

As I have said here before, some of the hydrogen plans might not work out, but their is multiple pathways to hydrogen monetisation in the works, and even if hydrogen is a complete failure, all is not lost because we still have all that renewable infrastructure that we can use for our own consumption and also sell to the grid.

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I am well aware of the strategy...

The Perth-headquartered iron ore miner currently powers its operations with fossil fuels, such as diesel and gas. As part of its broader green energy push, Fortescue has detailed plans to shift its operations to renewable energy by 2030. The company plans to spend about AU$9.2 billion on the energy transition, according to a Wall Street Journal report.

However, Fortescue estimates the renewable energy shift will save it more than AU$1 billion in annual costs, delivered through energy and carbon credit purchase savings. The renewable energy shift plan also aligns with Fortescue’s goal to achieve net-zero carbon emissions target by 2030.

My concern is how much of the savings is coming from carbon credit purchase savings... What is the value of the carbon credit purchase savings... ie. how much money is an Australian carbon credit worth... Where are they traded... How much is the government willing to pay for one today vs. 5 or 10 years from now. I have not seen an Australian carbon credit traded or a value placed upon it... If a carbon credit is 50% of the value of savings rather than a 10 year payback.. it will be a 20 year payback if the government runs out of money.

Value Collector said:

I am not sure about that, being paid 10% while we wait for a 100% capital gain screams buy and hold to me.

It’s funny how a 5% Div stock, with maybe potential for 5% capital gain per year can be considered a buy and hold (which it is).

But just because a stock price is a bit more volatile, it gets written off as a trading stock even though the potential gains are huge.

I would much rather a bumpy 15% return than a steady 10%

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So at well under 7% from what i sold it for should i return???? Or wait for another 7% discount to current price?

UMike said:

So at well under 7% from what i sold it for should i return???? Or wait for another 7% discount to current price?

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I don't know, I am not a trader so I can't offer advice on your trading strategy, I just buy quality companies and hold them.

I am confident todays price represents great value, and would result in a great buy and hold opportunity for the long term investors looking for dividends and capital growth over time. But some one that focuses on short term price fluctuations will find their returns basically based on the randomness of the news cycle and the iron ore price sentiment in the short term.

Taking a longterm position in Fmg is a kin to buying a high quality farm or apartment building you plan to hold longterm as a store of value that produces income. Buying or selling FMG based on your guess of whether it will be up 7% next week or down 7% next week is more like betting Red or Black on the roulette wheel. You might guess right or you might guess wrong, but it would be a mistake to believe a correct guess was based on skill, that would lead you to become a gambler and suffer a gamblers fate.

UMike said:

So at well under 7% from what i sold it for should i return???? Or wait for another 7% discount to current price?

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My attitude is to buy lowish which is somewhere above $14 and sell around $20 and let the ole Twiggy have his heart attack giving me nearly 50% profit each bet.

If he does have a health event as they say, I’ll lower my buy price.

Not that I’d want anything to happen to the ole Twigs.

gg

Not asking for Advice from VT But am pretty damm sure that knowing FMG price fluctuations it is almost certain that a dip to $19 and below and a peak over $20. are almost certain.
Just depends on how cheeky the trade is to be.
Buying and blindly holding FMG is a waste of a knowledgeable person's time.

UMike said:

Not asking for Advice from VT But am pretty damm sure that knowing FMG price fluctuations it is almost certain that a dip to $19 and below and a peak over $20. are almost certain.
Just depends on how cheeky the trade is to be.
Buying and blindly holding FMG is a waste of a knowledgeable person's time. Be

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There was a time when fmg would fluctuate between around $2.5 and $1.80, no doubt some traders sold out at around $2.5 that last time knowing that is was sure to head back towards $2 on it’s next fluctuation, because after all it was just a “trading stock”.

But, then it didn’t go to $2 again it headed to $6, and paid some dividends along the way.

The story is repeated many times, leading up to its share price now in the $20’s. each time some traders manage to make some good trades, which make them feel good in the short term, but they also probably missed out on some oversized dividends, some of the big run ups in share price, probably paid a higher rate of capital gains tax and maybe missed some franking credits etc while paying some extra trading costs.

I am pretty happy with just holding FMG for the past 8 years or so, I have received all the dividends which is more than I paid for the stock, all the franking credits, paid no CGT yet and when I do it will be discounted, paid no additional reading costs, and didn’t have to fiercely follow the ups and downs refreshing my screen to see if the daily ups or downs made me happy or sad.

By all means Trade if that’s your nature, but I don’t believe it’s a better strategy in general than just holding quality stocks.

Right now I am sitting in my easy chair reading enjoying the warm weather, I did some yoga this morning, I’m just about to make some lunch and then enjoy a movie with the wife or maybe some video games on Nintendo switch at happy hour, That’s the type of life style I enjoy, I Don’t want to be making trading choices every day and I don’t feel trading would have got me to be able to retire at 36 like I did.

Buy and hold suits me, I prefer limiting my investment activity to making long term decisions and reading annual and half yearly reports etc

I do use options which is the closet income to trading, but even that is related to my long term investing.

Value Collector said:

There was a time when fmg would fluctuate between around $2.5 and $1.80, no doubt some traders sold out at around $2.5 that last time knowing that is was sure to head back towards $2 on it’s next fluctuation, because after all it was just a “trading stock”.

But, then it didn’t go to $2 again it headed to $6, and paid some dividends along the way.

The story is repeated many times, leading up to its share price now in the $20’s. each time some traders manage to make some good trades, which make them feel good in the short term, but they also probably missed out on some oversized dividends, some of the big run ups in share price, probably paid a higher rate of capital gains tax and maybe missed some franking credits etc while paying some extra trading costs.

I am pretty happy with just holding FMG for the past 8 years or so, I have received all the dividends which is more than I paid for the stock, all the franking credits, paid no CGT yet and when I do it will be discounted, paid no additional reading costs, and didn’t have to fiercely follow the ups and downs refreshing my screen to see if the daily ups or downs made me happy or sad.

By all means Trade if that’s your nature, but I don’t believe it’s a better strategy in general than just holding quality stocks.

Right now I am sitting in my easy chair reading enjoying the warm weather, I did some yoga this morning, I’m just about to make some lunch and then enjoy a movie with the wife or maybe some video games on Nintendo switch at happy hour, That’s the type of life style I enjoy, I Don’t want to be making trading choices every day and I don’t feel trading would have got me to be able to retire at 36 like I did.

Buy and hold suits me, I prefer limiting my investment activity to making long term decisions and reading annual and half yearly reports etc

I do use options which is the closet income to trading, but even that is related to my long term investing.

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Have you purchased any pure play solar generation stocks? If any are publically traded, would you mind sharing them?

Thanks,

dat111 said:

Have you purchased any pure play solar generation stocks? If any are publically traded, would you mind sharing them?

Thanks,

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Nope, I am not aware of any pure plays. But I do have exposure to solar in a few other ways.

1, I own my own solar panels.

2, I have solar panels on some rental properties which I charge extra rent for.

3, I provide loans to people installing solar through the Plenti loan platform

4, I have held APA for 20 years, they have a few solar and wind sites, FMG also have some solar, and Berkshire Hathaway energy has a lot of wind and solar.

5, I have investments in charter hall who are adding solar to their commercial properties and leasing some of their roof space for solar.

I think there is going to be some volatility in both the FMG share price and Iron Ore price between now and March. There is a whole bunch of both positive and negative things at play in the short term at the moment. It’s going to be very hard to pick whether the market is going to be bullish or bearish on any given day based on all the factors.

1, China is dumping the covid Zero policy which is very positive long term, because it will end the endless interruptions caused by lock downs.

2, The bad thing is in the short term, say 3 months the spread of the virus will cause some major chaos, that could be worse than the lock downs, but will end eventually like it did here.

3. Positive thing is the Chinese government has said they will pull out all stops to keep the economy stable and be ready for growth, which should be good for iron ore.

4. The Chinese government has started a platform for centralised purchasing of Iron Ore, which isn’t a bad thing, it might actually create more stable pricing, but in the short term could cause some traders to dump Iron Ore holdings etc and mills to run down stocks which will affect spot pricing, but it should stabilise within 3 months.

So basically there is some great reasons to be positive over the long and medium term, but some short term situations that could cause so negative effects also.

Value Collector said:

4. The Chinese government has started a platform for centralised purchasing of Iron Ore, which isn’t a bad thing, it might actually create more stable pricing, but in the short term could cause some traders to dump Iron Ore holdings etc and mills to run down stocks which will affect spot pricing, but it should stabilise within 3 months.

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More on this with FMG mentioned, and some broader "off topic" subject, but pertinent to us investing trading types.

https://www.mining.com/chinas-central-iron-ore-buyer-may-replicate-success-in-lithium/

Twiggy keeps the grass around his feet well mown. Always new developments in the wings with FMG/FFI.

This green steel project marries FMG's massive production of iron ore with creating a viable way of make green steel from the ore.

Fortescue, Primetals Technologies, and voestalpine to jointly evaluate groundbreaking green ironmaking plant​

On December 19, Primetals Technologies, together with its strategic partners Mitsubishi Corporation, Fortescue, a global leader in the mining and heavy industries, and globally leading steel and technology group voestalpine, signed a Memorandum of Understanding (MoU).

The partnership is aimed at designing and engineering an industrial-scale prototype plant with a new process for net-zero-emission ironmaking at the voestalpine site in Linz, Austria. The collaboration will also investigate the implementation and operation of the plant.

The new ironmaking process will be based on Primetals Technologies’ HYFOR and Smelter solutions. HYFOR is the world’s first direct reduction process for iron ore fines that will not require any agglomeration steps, like sintering or pelletizing. A pilot plant has been in operation since the end of 2021, and Primetals Technologies has run numerous successful test campaigns over the last year including successful trials on Fortescue’s Pilbara iron ore products.

The new Smelter technology from Primetals Technologies is a furnace powered by electrical energy. It is used for melting and final reduction of direct reduced iron (DRI) based on lower-grade iron ores. In that way, it produces alternative green hot metal for the steelmaking plant.

..... Fortescue’s main responsibility in the new project is to provide knowledge about iron ore quality and preparation. In addition, Fortescue will supply various iron ores for the new plant.

Fortescue Future Industries (FFI) CEO Mark Hutchinson said the partnership was the perfect alignment of the company’s mining and renewable energy goals: “Fortescue has more than two decades of expertise in the iron ore industry, rising to become one of the world’s lowest cost exporters, now shipping more than 180 million tons of iron ore a year. Global demand for iron ore and steel will remain strong for years to come, but we need cleaner, greener industry powered by green energy to eliminate emissions.”

An industrial prototype

The project planning phase will be used to design an industrial-scale prototype plant with a capacity of between three to five tons of green hot metal per hour. It is the first solution to link a hydrogen-based direct reduction plant for iron ore fines with a Smelter.

The main goal of the project planning phase is to develop the basis for decision to realize a prototype plant capable of continuous operation, and then to gain the know-how needed for the next step, a commercial full-scale plant. Another target is to investigate the use of various types of iron ores to produce DRI, hot briquetted iron (HBI), and hot metal and, as a next step, draw conclusions about the individual process steps as well as different combinations of them.

Still holding FMG and have chosen it for the 2023 stock comp.

I think the $100 a ton iron ore price is holding and with new high grade ore coming onto the market plus development of the renewable energy projects a 2023 price of $40 per share is quite possible.

But that's just my thoughts. I Googled a far more detailed and authoritative analysis of FMG which appears exceptionally impressive.
A Crystal Ball of exceptional clarity. With this sort f detailed information surely one could trade a fortune on the predicted highs and lows.

FMG Share Price Forecast 2023, 2024​

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January 2, 2023 3:45 pm.

Fortescue Metals Share Price Forecast For Tomorrow, This Week And Month.​

FMG Share Price By Day​

There are always a range of stories on FMG in AFR. Soem examples

Relentless Forrest never concedes defeat​

Billionaire Andrew Forrest’s huge ambition and drive, along with an appetite for risk-taking, has shaped the economy and the fortunes of his company.

• Dec 16, 2022
• Jennifer Hewett

How Sweden’s dash for green steel could trigger a Pilbara revolution​

A Nordic experiment called Hybrit is the first runner in a global race to reshape an entire industry. BHP, Rio, Fortescue and GFG could be in the box seat - if they dare.

• Dec 9, 2022
• Hans van Leeuwen

Rio Tinto and Fortescue in talks on green hydrogen​

Rio Tinto and Fortescue Metals Group seek common ground on green hydrogen amid conflicting views of the role it can play in energy transition.

This man is using ‘pixie dust’ to solve green hydrogen’s big problem​

Professor Greg Metha and Fortescue might have a solution to Saul Griffith’s fear that Australia will waste time, money and renewable power making green hydrogen.

• Updated Nov 14, 2022
• Peter Ker and Lap Phan

Value Collector said:

Nope, I am not aware of any pure plays. But I do have exposure to solar in a few other ways.

1, I own my own solar panels.

2, I have solar panels on some rental properties which I charge extra rent for.

3, I provide loans to people installing solar through the Plenti loan platform

4, I have held APA for 20 years, they have a few solar and wind sites, FMG also have some solar, and Berkshire Hathaway energy has a lot of wind and solar.

5, I have investments in charter hall who are adding solar to their commercial properties and leasing some of their roof space for solar.

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no ORG ??

ORG through a state government initiative installed ( well had sub-contractors install ) 3 solar arrays , on the properties held at the time ( one each property ) which fed into the grid giving ( most periods ) a rebate after paying down the solar installation loans

divs4ever said:

no ORG ??

ORG through a state government initiative installed ( well had sub-contractors install ) 3 solar arrays , on the properties held at the time ( one each property ) which fed into the grid giving ( most periods ) a rebate after paying down the solar installation loans

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I prefer APA over ORG.

Value Collector said:

I prefer APA over ORG.

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i used to hold ORG but have exited ( probably permanently )

APA has never arrived at my price target ( i held Ethane Pipeline in the past , but APA took them out in an all cash deal )

FMG continues to lose its top execs ith the departure of Ian Wells, the group CFO.
From The Evil Murdoch Empire

Fortescue Metals Group's long-serving group chief financial officer Ian Wells resigns, adding to the exodus of senior executives.
Mr Wells, who joined Fortescue in 2010 and has been CFO since 2018, resigned "to pursue other opportunities".
It is the latest senior resignation to hit Andrew Forrest's iron ore company, with just two of 11 members of Fortescue’s executive leadership team listed in the company’s 2021 annual report remaining with the company.
“Ian has been a trusted member of the executive team which has led Fortescue through a number of iron ore market cycles, more recently the impacts of Covid-19 together with global volatility," Dr Forrest said.
Fortescue is undertaking a process to identify Mr Wells’ successor.
He will continue in his current role until January 31.
Despite the extraordinary changeover in its executive ranks, Fortescue booked record shipments and its second-highest profit last financial year.
The company beat export guidance to ship 189 million tonnes of iron in the year and recorded a $US6.2bn net profit on the back of the strong iron ore price.

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At some stage, the departure of so many execs has got to be a bit of a Problem.
Mick

mullokintyre said:

FMG continues to lose its top execs ith the departure of Ian Wells, the group CFO.
From The Evil Murdoch Empire

At some stage, the departure of so many execs has got to be a bit of a Problem.
Mick

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It depends, as technology is changing rapidly, there is a natural tendency to resist the change.
It means that a lot of senior management have to learn new technical knowledge, I think a lot of 50+ age group managers will be struggling with keeping on top of their brief and it wont only be with FMG management.
This change to new clean energies will affect everyone, from the lay person to the top executives, not all will cope well with the stress of it IMO.
I saw the introduction of a distributive control system installed in an aging long established plant, most of the older personel walked.
The last thing they wanted, was to have to start learning the whole process from scratch, using technology that they struggled to get their heads around.
I'm not suggesting that this is the reason for the FMG turn over, but I bet it has caused some of the turn over, digging holes and loading ships is a lot different from developing a completely new production process and marketing a dream.