FMG (ASX) Iron Ore Price

Originally posted by AverageJoe ↑

You really need to get a hold of your bias. Why has it taken this long to look into tax avoidance schemes? Could it be that their big export earners are shrinking plus austerity measures is not being approved by the Senate so they are now in panic mode turning every nook and cranny looking for tax leakage? ABARE and all economic experts model their IO future pricing wrong, forgiven as forecasting is a very inaccurate science, there are a lot of moving parts each are being pulled in different directions by yet other factors.

We can talk in circles about big boys colluding OR Twiggy economic with truths etc. Posters here seems to think it is justified to character assassinate Sam especially yet are oblivious of Twiggy's corporate past. BOTH are working for the benefit of their company.

Here are the facts so we are not playing the blame game to make drawdown justified.

BHP/RIO (BR) are long term Tier 1 miners and as such have decided that a lot of potential grounds are sub economic and decided not to invest in them

FMG got lucky and rode the IO boom but lost touch of risk/debt management with the assumption of stronger for longer mentality. Their grades are sub economic if using the long term IO pricing and I am not talking a curve fit 10 year look back.

BR are diversified, FMG is NOT

BR has a stronger BS and still cash flow positive net, FMG is is only cast cost positive and the market is skeptical of this moving forward. Don't confuse the tax minimisation issue which is just the current noise.

FMG requires the prepayment in order to continue OPEX, never mind accumulating cash reserve to pay the loan capital

No need to go on and talk utopian ideal business and political models in which case it becomes endless bickering of models and political bias.

Here are my reasons for having an interest in IO, indirectly;

I use coal and IO as a measure of measuring world growth and much so China which is the few beacon of world growth that will and have big implication for our economy. Coal leading and IO confirming that China is slowing . Each year that target % growth is revised down and the Govt is having difficulty meeting the target. Yes growth is still growth but I am no economist so I can only suspect that with the amount of sovereign debt sunk into fix assets and not efficiently utilised, they are now finding that they require a certain level of growth to mitigate social and economic problems. Their CB still has a lot of levers to pull in order to stimulate. These are my personal bias and not facts.

So I am forming this view that subject to Chinese Govt conservatism with stimulus, I don't see many triggers for demand of IO to pick up. I don't know where in the future will demand starts to pick up or if it will!

So it is with this view in mind that I have no reasons to want exposure to FMG for fear of an AGO style slow death. I would be MUCH more comfortable in BR but that is another contemplation.

Expand

FMG really got lucky spending and $12.0b and employing over 15,000 as well as paying tax, without using Singapore and offshore havens.

After repaying back $3.6b, all they needed if they were luck another 6-12 months for the price to remain above $90.0mt and their debt problem would have diminished, that would have been lucky.

This Tier 1 argument is rubbish, BHP/RIO have no god given right to claim this mantle.

I believe sometimes you seem to be biased towards the big 2, FMG will fall or survive on its merits, nothing to do with luck, they are rapidly cutting costs and are nearing that Tier 1, tax evader BHP.

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(20min delay)
Last $16.90		Change -0.080(0.47%)		Mkt cap ! $52.03B

Open	High	Low	Value	Volume
$16.98	$17.03	$16.75	$96.61M	5.713M

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