FMG - Fortescue Ltd

[sptrawler]

yep, and now it's official. Honcho faces the instos, stuff goes on spreadsheets, and projections get altered.

You nailed it.
The incense and group smoking meetings go on the back burner and the projects that can be done for sensible money go forward, while those that aren't get filed in the round filing cabinet.

 

[Skate]

Great conversation
I'm unable to bring much to the conversation but strong returns on capital are a positive factor. Below are some facts and figures lifted from the Simply Wall St website.

Here are some key points about Fortescue Metals Group (ASX:FMG):
1. Fortescue Metals Group has a market capitalization is AU$59.7 billion.

2. The company's stock price has fallen 4.4% over the past week but is up 8.9% over the past year, outperforming the Australian metals and mining industry and market.

3. Valuation metrics show the stock may be undervalued compared to peers, with a price-to-earnings ratio of 7.9x vs the industry average of 18x.

4. Earnings are forecast to decline 17% per year over the next 3 years.

5. The dividend yield is high at 9.0%, but the payout ratio is also high at 75% indicating potential risk to the dividend.

6. Financial health is good with manageable debt levels.

7. Returns on capital are strong at 33%, indicating efficient use of capital.

8. Less than half the board members are independent directors.

Overall
The analysis suggests Fortescue may be a reasonably valued stock in the materials/mining sector, with some risks around potential earnings declines and dividend sustainability. The Revenue and expense breakdown seems reasonable.

Skate.

 

[orr]

The theme of the talk was "lethal humidity". The inevitable consequence of rising temperatures. Lethal for animals as well as humans.

Certainly a challenging thought. As he pointed it there are scores of scientists who have been raising this concern. Twiggy is just articulating it publicly to emphasize the need to move at maximum speed to decarbonise industry. His industry in fact.

Is his projected timescale impossible ? Maybe. Suggesting that it all has to be done in Australia is misleading. There are many other countries that can if pushed or as part of joint effort produce the amounts of renewable energy that could displace our current fossil fuel use.

Deciding that global warming is not going to get "that bad" because "well it can't/won't/we don't know" is about as intelligent as sitting on the Titanic after its been ripped by the iceberg and saying essentially the same thing. The challenging reality Twiggy is asserting (from scientific observations) is that the projected possibility of lethal humidity is happening now - not sometime in 2060-7-80.

It may well be too late to do anything. But that doesn't make Twiggys speech any less real.

Potentially Fatal Combinations of Humidity and Heat Are Emerging Across the Globe

A new study has identified thousands of incidents of previously rare or unprecedented extreme heat/humidity combinations in parts of Asia, Africa, Australia, South America and North America, including in the U.S. Gulf Coast region.

news.climate.columbia.edu

What I took from Twiggy's talk was his understanding of risk.
Given the heat maps put forward and the population centers encompassed and possible effects of a humidity event that are not now out of the realms of possibility.
If one those more calamitous combinations were to come together and outcomes eluded to by Dr Forrest's talk were to come to pass....
Well; there's a few political complications that would ensue that are well beyond my pay grade.

Other than, dare I posit, a more hurried move toward less CO2 polutuion.
Zero carbon FMG iron ore/ share price in that senario ???

or of course for those desposed you can defer to nick cater and let him do your thinking for you.

 

[dat111]

What I took from Twiggy's talk was his understanding of risk.
Given the heat maps put forward and the population centers encompassed and possible effects of a humidity event that are not now out of the realms of possibility.
If one those more calamitous combinations were to come together and outcomes eluded to by Dr Forrest's talk were to come to pass....
Well; there's a few political complications that would ensue that are well beyond my pay grade.

Other than, dare I posit, a more hurried move toward less CO2 polutuion.
Zero carbon FMG iron ore/ share price in that senario ???

or of course for those desposed you can defer to nick cater and let him do your thinking for you.

We are talking about zero carbon iron ore production... Whoop dee doo... Making 1 ton of steel emits 1.8 tons of carbon dioxide... in 2021 a little less than a 4.6B tons of carbon dioxide was producted...by making steel... That is the industry that FMG is involved in...

 

[houtman]

This being the FMG thread and all.

 

[mullokintyre]

FMG/Twiggy sems to be getting it from all sides.
Firstly, Margin Call suggests that FMG has been a bit tardy in keeping its promises.
From Evil Murdoch press

Orica chief executive Sanjeev Gandhi seems to have thrown down the gauntlet to billionaire Andrew ‘‘Twiggy’’ Forrest, who’s been banging on forever about a deal to produce hydrogen at Incitec Pivot’s mothballed Gibson Island ammonia plant in Brisbane.
Two years on and Fortescue is yet to deliver a feasibility study on the plant.

The one glimmer of hope is that it remains among five green energy projects that Forrest lieutenant Mark Hutchinson swears will receive a final investment decision by the end of the year. To paraphrase Dumb and Dumber’s Lloyd Christmas, it means, yes, there’s a chance.
And what about Forrest’s commitment in 2021 to build the world’s largest electrolyser plant in the central Queensland town of Gladstone? He turned the first sod last year and gave a tall order that production would start in 2023. “We have orders right now to take these electrolysers as they come off the production line next year, and that order list is growing rapidly,” he said at the time.

Well, the building is there, but it’s all crickets for now, with Fortescue immensely quiet on the fine detail of, you know, when it will actually start delivering an exportable product.

No word either on Fortescue’s ancient partnership with AGL in the Hunter Valley to repurpose the Liddell and Bayswater power stations – that idea, from 2021, was to pivot the facilities away from filthy coal and nudge them into the production of green hydrogen and ammonia.

Then in the same article, Orica CEO Ganghi has initiated a race to the green hydrogen finish line.

Many promises, few accomplishments. And now here’s Gandhi strutting in at Orica’s annual investor brief with a thinly veiled suggestion that, perhaps, just maybe, there’s some kind of race afoot in the green hydrogen stakes.

Well, he didn’t say it in so many words, but how else to interpret his remarks that Orica, one of the biggest carbon emitters in the country – and Incitec’s chief rival, no less – is on track to build its own commercially viable hydrogen plant in the Hunter Valley by 2026? The hope is to use renewable hydrogen to replace natural gas in the manufacture of (slightly) lower-carbon ammonia.

Here’s Gandhi, in his own words: “We are happy to produce green hydrogen by the way of (a) 50 megawatt hour electrolyser that would be the largest commercial electrolyser in the world, if I can get that up and running in 2026.

“So it feels small, it is small, but it is still today the biggest one that will operate commercially.”

What else needs to be said? It’s on, baby!

Whatever happens, you can bet both orgs will be looking for some incentives from the feds- either via Tax holidays, direct investment, low interest loans, exemptions from various rules and regs, maybe even an OA for the bosses.
Mick

 

[mullokintyre]

I was kinda surprised that I had not seen any rference to this in the OZ media.
From Bloombergs

About three weeks after Shell, Europe's largest oil company, quietly shelved the world's largest corporate plan to develop carbon offsets, the world's number four iron ore producer, Fortescue Metals Group Ltd., has decided to end purchases of voluntary carbon offsets. This comes as at least one major study has revealed carbon offsets are prone to 'greenwashing' and most credits don't actually benefit the climate.

Billionaire Andrew Forrest's Fortescue Metals produced about 2.55 million tons of scope 1 and 2 carbon dioxide emissions in the year leading up to June 30.
"We are the only heavy emitter in the world to stop purchasing voluntary offsets," Dino Otranto, chief executive officer of Fortescue's metals business, said in a statement.
The move by Fortescue comes after Shell laid out an updated strategy for the company that included cutting costs and doubling down on profit centers (oil and gas) - which notably shelved the world's largest corporate plan to develop carbon offsets.

According to Bloomberg Green's investigations, many offset programs don't deliver the promised environmental benefits.

Mick

 

[qldfrog]

I was kinda surprised that I had not seen any rference to this in the OZ media.
From Bloombergs
View attachment 162736


Mick

Today's offset in Oz are the carbon farming plantations which will trigger the next cataclysmic inland bushfires and release billions of tons of smoke and real pollutants while decimating wildlife and human lives during the next drought cycle..beginning this year....

 

[mullokintyre]

Today's offset in Oz are the carbon farming plantations which will trigger the next cataclysmic inland bushfires and release billions of tons of smoke and real pollutants while decimating wildlife and human lives during the next drought cycle..beginning this year....

Prior to Humans existing here in Gwondanaland say 50 o 60 thousand years ago, there would have been a lot more carbon sequestered in trees, grasses shrubs etc.
So without Human intervention, there would have been no clearing of firebreaks, no cold fuel reduction burning, no arsonists lighting fires, and finaly no CFA water bombers etc etc to put them out.
So one might expect that fires were less frequent, but once they took hold, they may well have burned for weeks if not months until they were put out by another weather weather event , or reached some sort of natural barrier (rocky hills, lakes, the ocean etc).
Would have been interesting.
Mick

 

[Dona Ferentes]

Today's offset in Oz are the carbon farming plantations which will trigger the next cataclysmic inland bushfires and release billions of tons of smoke and real pollutants while decimating wildlife and human lives during the next drought cycle..beginning this year....

Discuss.

Prior to Humans existing here in Gwondanaland say 50 o 60 thousand years ago, there would have been a lot more carbon sequestered in trees, grasses shrubs etc.
So without Human intervention, there would have been no clearing of firebreaks, no cold fuel reduction burning, no arsonists lighting fires, and finaly no CFA water bombers etc etc to put them out.
So one might expect that fires were less frequent, but once they took hold, they may well have burned for weeks if not months until they were put out by another weather weather event , or reached some sort of natural barrier (rocky hills, lakes, the ocean etc).
Would have been interesting.
Mick

Australia as a continent has been drying out since the Pleistocene.

the only constant is change

 

[mullokintyre]

FMG putting some money down for a Hydrogen Electrolysys co.
From Evil Murdoch Press

Fortescue has led a $US380m funding round for California-based electrolyser company Electric Hydrogen, pushing the latter’s valuation to $US1bn.
The investment round included a number of high profile names including BP Ventures, Temasek, Microsoft’s Climate Innovation Fund and the United Airlines’ Sustainable Flight Fund.

The other co-lead investors were Fifth Wall and Energy Impact Partners.
Electric Hydrogen (EH2) was founded in 2020 and expects to ship its first 100MW electrolyser next year.

Fortescue said separate to the investment in the company. it had also signed a framework procurement agreement for the supply of one gigawatt of EH2’s electrolyser systems to Fortescue’s green hydrogen projects in the US and globally.

“Each EH2 electrolyser system can make nearly 50 tons of green hydrogen per day at transformational low cost,’’ Fortescue said on Wednesday.

Fortescue Energy chief executive Mark Hutchinson said green hydrogen was critical to the company’s mission to help heavy industry decarbonise.

“Right now there are not enough electrolysers in the world to support the amount of green hydrogen we are set to produce,’’ he said.

“That is why we are partnering with other world leaders in this space to secure our green energy supply chain, and we’re excited to invest and secure capacity with Electric Hydrogen to help us achieve our goals.

“Electric Hydrogen, just like Fortescue, is working at the speed and scale necessary to help deliver green hydrogen projects around the world and stop the need for fossil fuels.’’

EH2 has raised more than $US600m since it was founded, with other major companies investing including Amazon and Honeywell.
From Evil Murdoch Press

Maybe I should have put it in hydrogen thread?
Mick

 

[basilio]

FMG putting some money down for a Hydrogen Electrolysys co.
From Evil Murdoch Press

Maybe I should have put it in hydrogen thread?
Mick

That suggests FMG believes this Electrolysis unit is as cost effective and immediate as it can find anywhere. So they will just order a few and have them installed at their Queensland plant rather than attempting to design and build something themself. Buying into the company gives them a piece of the overall profit as well as early options for the completed units. It will be interesting to see when the units will be available and then installed.

This looks like one of the 5 Green energy projects they promised to finalise this year.

Of course the next critical step is setting a truckload of cheap solar power to run the unit.

It was announced by FMG today.

And they are still pumping out a Billion tons of iron or in the past 5 years

Fortescue Invests In Electric Hydrogen Electrolysers

Fortescue has today announced it has taken the lead investor role in Electric Hydrogen’s (EH2) US$380 million Series C funding round.

fortescue.com

We've shipped 2 billion tonnes!

Picture this: 2 billion tones is 2.5 times the estimated weight of the entire human population! The hard work and extraordinary efforts of our Fortescue family are being celebrated for reaching the milestone of 2 billion tonnes of Iron Ore.

fortescue.com

 

[basilio]

I was kinda surprised that I had not seen any rference to this in the OZ media.
From Bloombergs
View attachment 162736


Mick

It was highlighted in FMG's Annual Report. Came up very early and strongly noted.

The Carbon Offsets industry has been too easy to rort. High quality well executed projects would definitely be a good idea for carbon sequestration. Unfortunately business does not do "High Quality, well executed" when they can make a truck load of credits with creative story telling and soft supervision.

Twiggy is absolutely serious about reducing carbon emissions world wide. From a business as usual perspective it was always cheaper to buy cheap credits and pretend they were all going well. I can quite understand the tension between those who wanted to take the credits road and Twiggy saying this was just BS - let's actually do it.

 

[rcw1]

 

[qldfrog]

Toyota pushing more and more for a imho better solution
Engines burning h2 either via cells or directly ice from ammonia .
The later a realistic way to power hauling trucks, generators, trains here when currently diesels and long haul semi trailers..that would make technical sense vs pipe dream tonnes of non existent sorry rare earth batteries system.
i would not be surprised big existing diesel engine could be converted .
Hum, is it me or does it seem a good fit?
Hey Twiggy, if one day you want to apply sciences and technology to problems, you know:
engineering; give me a call and I could help you for a year or two if properly remunerated

 

[basilio]

Toyota pushing more and more for a imho better solution
Engines burning h2 either via cells or directly ice from ammonia .
The later a realistic way to power hauling trucks, generators, trains here when currently diesels and long haul semi trailers..that would make technical sense vs pipe dream tonnes of non existent sorry rare earth batteries system.
i would not be surprised big existing diesel engine could be converted .
Hum, is it me or does it seem a good fit?
Hey Twiggy, if one day you want to apply sciences and technology to problems, you know:
engineering; give me a call and I could help you for a year or two if properly remunerated

Don't be surprised if Twiggy does use this type of technology for part of their operations. For example the bulk iron ore carriers and ore trains.
The intention is to produce vast amounts of cheap Hydrogen for industrial use.

Check out page 47 of the Pilbara report

 

[basilio]

FMG guidance and operations update. They are still spruiking their iron ore business - as they should.
Excellent overview of the Iron Bridge operations and the move to green energy mining.

PILBARA OPERATIONS SITE TOUR PRESENTATION

Fortescue Metals Group Ltd (Fortescue, ASX: FMG) is hosting an institutional investor and analyst
tour of its Pilbara Operations on 12-13 October, including a visit to Christmas Creek, Iron Bridge
and Hedland Operations. A copy of the presentation is attached.

Operations and guidance update

Fortescue advises its September 2023 Quarter iron ore shipments totalled 45.9 million tonnes (mt),
three per cent lower than the prior corresponding period with increased maintenance activity and
lower stocks at port following the record shipments achieved in FY23.

FY24 guidance for total iron ore shipments is unchanged at 192 - 197mt. This is inclusive of
approximately 5mt from Iron Bridge (100 per cent basis) (previously 7mt). The revised estimate for
Iron Bridge reflects the production ramp up curve as performance of the raw water pipeline and
plant rectification works impacted availability in the September 2023 Quarter. The ramp up to full
production capacity of 22mt per annum remains unchanged and is expected within 24 months.

Pilbara Operations Site Tour Presentation (PDF 9,531.2 KB)

 

[basilio]

FMG has been going on a run this month, Currently at $23.16 15% higher than end of September.

With the current political crisis situations is this a high point with significant more downside than upside potential in the next few months ?

Thoughts ?

 

[againsthegrain]

FMG has been going on a run this month, Currently at $23.16 15% higher than end of September.

With the current political crisis situations is this a high point with significant more downside than upside potential in the next few months ?

Thoughts ?

sold at 22.90 today so prob will go up 1 or 2 bux still before it falls

 

[sptrawler]

sold at 22.90 today so prob will go up 1 or 2 bux still before it falls

Sods law, if you sell it goes up, if you hold they fall and then comes the usual capital raising to pay out the management before the administrators come in. Lol