Fortescue Metals Group Ltd (FMG)
All research reports and stock updates for Fortescue Metals Group Ltd.
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Changing hue
Fortescue’s iron ore business is producing dependable results and supporting a decent dividend payment. But the FFI noise is becoming a cacophony of speculative partnerships and pioneering projects, bolstered by the lure of subsidies.
Green eggs and spam
We imagine that Fortescue Metals Group may change its company name to reflect its strategic focus more accurately. The iron ore business is still highly profitable but subordinate to the decarbonisation and green hydrogen agenda.
Mrs Winslow's Soothing Syrup
Fortescue Metals has released a roadmap to eliminating carbon emissions from its Pilbara iron ore operations. The capex required amounts to US$6.2 billion over eight years and is incremental to existing planned capex. This expenditure does not include Fortescue Future Industries’ multiple green hydrogen potential projects beyond FMG’s iron ore operations.
"It's alive!"
Production is humming at Fortescue, but some cost headwinds and lower realised prices bring some reality to the story. China’s steel output is lower so far this year but could readily turn if the government wills it. FMG has developed a fixation with hydrogen that is consuming increasing amounts of profits.
Magic wears off
Lower iron ore prices and a bigger average price discount have eaten into Fortescue’s interim profit compared to the lofty outcome last year. Full year guidance is unchanged but higher costs are beginning to niggle.
FFI monster poses big questions
The appointment of FMG’s next CEO will be a crucial decision as the job description will require the leader to straddle two incongruous businesses. One is a mature, single commodity business with Chinese customers. The other is an unproven punt on a future commodity that will take years of heavy capex and losses before shareholders may see any benefits. Importantly, FMG is now being used to fund the operational status of FFI (Fortescue Future Industries), but the funding of FFI’s extensive project list is a mystery.