POWER!!!! Fortescue Future Industries, page-3873

Hey Wes,

Exciting times hey?

Here's another hypothetical to wrap your mind around ha ha!

Let's keep this hypothetical exercise simple.

If a heavy haul truck costs $5 million and the Liebherr/Fortescue split is 70%/30%, then as soon as a purchase is made, Fortescue would receive $1.5 million per haul truck with US$3.5 million in Liebherr's pocket. But as we know, I don't believe an order for one truck only would be made, unless the interested mining company wants to test a truck out.

Now let's take the real example of what Fortescue are aiming to do. Fortescue's plan is to allocate US$1.3bn or (21%) of the US$6.2bn decarbonisation spend plan towards their green fleet transition.

Seeing they're placing a large single order of 350 haul trucks with Leibherr, using my previous hypothetical example, it would reduce the cost per vehicle to US$3,000,000 per truck. Fortescue, through the partnership would receive 30% of that, therefore would cost Fortescue US$2.1 million per truck or US$735 million total for a fleet of 350 trucks. Well below the US$1.3bn spend, BUT is US$565m (the difference) enough for the remainder to allocate towards the green fleet? What we don't know is how many of their existing trucks are going to be retroffited and how many completely replaced? I'm thinking their 200 autonomous trucks could be the ones that might be retroffited, but that's only conjecture.

Here's where it gets interesting.

Let's say an order is placed for:

50 haul trucks in a fleet @ US$4,500,000 (using my previous hypothetical example) per truck x 50 trucks = US$225,000,000 @ 70 Liebherr / 30 Fortescue = US$157,500,000 (L) US$67,500,000 (F)

Fortescue would receive US$67,500,000 for that ONE order! The higher the fleet number the juicier the returns, not to mention the number of potential orders sealed per year.

This in only my opinion, but if they get this right, it could prove extremely lucrative for both parties and a plan to offset Fortescue's decarbonisation spend.

All a bit of fun whilst we wait to see what unfolds, but that folks could be the potential.

Tony