Shares in Value Logo
Product Review Img Vertical

Date : 23/11/2023

Fortescue Metals Group Ltd (ASX: FMG): Giving Boost To Its Stock Through Green Energy Project

Fortescue Metals Group Ltd (ASX: FMG), a renowned player in the global mining industry, has recently seen a remarkable increase in its share price, reaching a new 52-week high. This surge is primarily driven by a notable rise in iron ore prices, alongside the company’s strategic pivot towards innovative green energy initiatives. Historically an iron ore mining giant, Fortescue is now broadening its horizons by venturing into green hydrogen and green iron production, marking a significant shift in its business focus and operational strategy.

FMG: Key Financials

FMG shares are trading at $25.47 and have surged 32% in the past year. The current market cap of the company is approximately $78.42 Billion.

asx fmg share performance

  1. Revenue: $16.87 Billion, declining -2.98% YoY.
  2. Operating expense: $1.05 Billion, surging 63.79% YoY.
  3. Net income: $4.80B, falling -22.58% YoY.
  4. Earnings per share: 1.80 declining -10.45% YoY
  5. EBITDA: $9.60 Billion, dropping -8.64% YoY.
  6. Cash and short-term investments: $4.29 Billion declining -17.94% YoY

FMG: Green Energy Projects

Fortescue has embarked on an ambitious journey, committing to a series of green energy projects representing a cumulative investment of approximately US$750 million over the coming three years. These projects are pivotal in the company’s transition towards sustainable energy solutions. The essential tasks include:

  1. Phoenix Hydrogen Hub:This project in the United States involves an 80MW electrolyser and liquefaction facility in Arizona. It aims to produce up to 11,000 tonnes of liquid green hydrogen per annum, with a total investment of around US$550 million. The first production is expected in 2026, with potential for an “attractive” phase two development.
  2. Gladstone PEM50 Project:A 50MW green hydrogen project in Queensland, utilising Fortescue’s electrolyser technology. With an investment of up to US$150 million, the project is anticipated to start production in 2025.
  3. Green Iron Trial Commercial Plant:This plant, located in Western Australia, will focus on producing ‘green iron’ – iron processed without using fossil fuels, using renewable energy sources instead. The Christmas Creek green iron trial commercial plant, with an investment of up to US$50 million, is expected to produce more than 1,500 tonnes annually starting in 2025.
  4. These initiatives signify Fortescue’s dedication to sustainable practices and position the company at the forefront of the transition to clean energy in the mining sector.

FMG: What is Green Iron?

The concept of ‘green iron’ is at the heart of Fortescue’s environmental strategy. It involves the production of iron by processing iron ore with renewable energy sources instead of conventional fossil fuels. This innovative approach dramatically reduces the carbon emissions typically associated with iron production. The Christmas Creek green iron trial commercial plant in Western Australia is a prime example of this initiative. With an investment of up to US$50 million, the plant aims to produce over 1,500 tonnes of green iron annually, starting in 2025, setting a new standard in eco-friendly iron production.

FMG: Management Remarks

Fortescue’s leadership has been vocal about their optimism regarding these new green energy projects. With its strategic location and advanced technology, the Phoenix Hydrogen Hub is expected to play a crucial role in tapping into lucrative energy markets, particularly in the United States. Similarly, the Gladstone PEM50 Project in Queensland showcases Fortescue’s prowess in hydrogen production technology. These projects are not just business expansions; they represent Fortescue’s vision of being a key player in the global shift towards green energy.

FMG: FY 2024 Guidance Update

Fortescue has updated its financial forecasts for FY 2024 in alignment with these green initiatives. The company has raised the Fortescue Energy capital expenditure to US$500 million, an increase from the previously projected US$400 million. This uptick in investment is attributed to the additional financial commitments towards the Phoenix Hydrogen Hub and the Gladstone PEM50 Project. However, despite these new ventures, Fortescue Metals’ overall capital expenditure is expected to remain steady, ranging between US$2.8 billion and US$3.2 billion.

Conclusion

The strategic transformation of Fortescue Metals Group towards green energy projects marks a pivotal chapter in the company’s history. This shift from traditional iron ore mining to embracing green hydrogen and green iron production diversifies Fortescue’s business model and aligns the company with the global movement towards environmental sustainability. This visionary approach is set to yield significant long-term benefits for the company, its stakeholders, and the environment, solidifying Fortescue’s position as an innovator and leader in the renewable energy sector of the mining industry.

 

Are You Looking To Buy The Best Stocks In 2024?

Stay on top of upcoming market trends! Whether you are an SMSF investor or a young investor with your portfolio, we cover a wide range of stocks across all sectors, including mining, financials, industrials, real estate, technology, health and biotech, etc. It will give you an edge to invest and trade ASX listed stocks across large, mid and small caps with an advantage.

Get stock tips with our Market Experts. We help self-directed investors and self-managed super funds (SMSF) make smarter investment decisions and get better returns. Fill in your details and download your free Report instantly for Top 3 Dividend Stocks to buy in 2024!

 

Top 5 ASX Stocks
to Buy for Capital Growth in 2024

Shares In Value - Top 5 ASX Stocks to Buy - Cover 2024
The hardest part to finding growth stocks is having an ability to understand the finer details of these companies from their valuations through to first mover advantage and having key factors on hand to make informed investment decisions.

Our experts take the guesswork out.
ASX insight Stocks Landing

Download Your Free Report

By downloading this report, you agree to our terms and conditions and privacy policy

Scroll to Top

Login

By submitting this form, I agree to the TERMS AND CONDITIONS and PRIVATE POLICY

Income Stocks - Blogs

Please fill in your details to download the free dividend shares report.

By downloading this report, you agree to our terms and conditions and privacy policy

Just 10 Seconds Away From Your Free Report!
Income Stocks - Popup Blog

Please fill in your details to download the free dividend shares report.

By clicking 'Download Report', I accept the Privacy Policy and Member Terms & Conditions.

We will send your report instantly. Please put your correct email address and phone number.