They are trying mate, they stated they are exploring but as yet they have not found any sites which are commercially viable.
Your concern about FMGs lack of diversity is very much warranted however in years to come what we will see is a completely different company than what it is in 2022. FMG will no longer be a single product company. As early as next year we will see high grade Iron Ore being sold alongside our basic range and when at full production will increase revenue by more than 10%. Within 3 years FMG will also be selling Hydrogen. Therefore from being a mere low grade Iron Ore supplier today, we will at absolute minimum be a company selling Hydrogen, High Grade Iron Ore along with lower grade. Additionally the intention to sell lithium and green steel has been made public. Both of these do however have their hurdles one with quantity and the other with affordability (the formula for green steel has been found but at present isn't affordable to produce). In a unlikely but better case scenario we could see FMG selling 5 products instead of just one within a few years each of which will only get the go ahead if they are profit adding.
FMG is a very sound company but it has its present day challenges those being sharp increase costs of production which can be broken down to two main factors - increased labor costs and increased fuel costs. As a ex union delegate I'm very much into fairness and equality therefore I wouldn't like to see workers underpaid but one wonders if FMG is being as generous to workers as they are with share holders, whether this is controllable whilst at the same time being fair to its labourers. Pleasingly they are taking control of what they can, the replacement of diesel to hydrogen will see a 800 million saving annually which equates to over 50 cents a share (I'm not suggesting we holders will be seeing all of that but wouldn't it be nice) main point being that FMG is controlling what it can and taking action where possible, controlling its destiny and being proactive by making things happen.
As for Iron Ore softening, you are correct it has softened in price (which one imagines China's lockdown has had a big part to play and will improve once hundreds of millions are out of lockdown). Some seem to have overlooked that although iron Ore demand has softened this has not been the case through FMG. Our I.O. was reported as recent as this week as having 4% record increase in the quarter for sales compared to 1st quarter last year which was also a record.
I have no doubt that the next dividend will be hit hard and be nowhere near a buck. They will drop from being exceptional to just very good but in a few years (worse case scenario) when everything is working in unicen, when we have a few profit making products with cost saving measures such as transportation cost saving then we will return to exceptional returns. It's doubtful that Iron Ore prices will fall much further as too many mines will shut and supply will be limited if they fall much further.
Although in my opinion FMG ticks all the right boxes as a company including responsible economic management, future growth and expansion, a strong balance sheet it appears that this is not a short term trading stock as short term it most likely will be nowhere as rosey as its recent past however it's long term future looks exciting and rewarding for those who wish to hang around so I'm my opinion only its a hold and buy more at a discounted price if you have the patience and balls to see this down period through.
ALL IN MY OPINION- happy to hear contrary opinions but got no time for blatant b.s.
FMG Price at posting:
$14.76 Sentiment: Buy Disclosure: Held
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