UBS says Fortescue Metals' decarbonisation goals 'laudable', sees 15% annual returns

JIANDE INTERNATIONAL HOLDINGS

21/09/2022 02:48

** Analysts at Swiss-investment bank UBS say Australian iron
ore miner Fortescue Metals Group's  FMG.AX  decarbonisation
plans are laudable and reasonable, and accretive at current
capital estimates
    ** FMG, the world's fourth-biggest iron ore producer, on
Tuesday said it will spend estimated $6.2 bln to rid the use of
fossil fuels from its iron ore ops by the end of the decade
 urn:newsml:reuters.com:*:nL4N30Q2V8
    ** FMG adds plan will result in cumulative savings of $3 bln
by 2030, break-even on investment by 2034, and savings of $818
mln/year from 2030 onwards
    ** UBS says capital cost estimates are reasonable; estimates
15% internal rate of return - annual rate of growth expected
from an investment
    ** "Find FMG's decarbonisation goals laudable and returns
look attractive at current estimated capital and operating cost
drivers" - UBS
    ** However, expects ongoing lockdowns in China into
mid-2023, with property sector unlikely to stabilise until
December 2022/March 2023 quarter
    ** UBS retains "sell" rating with a price target of A$15.80;
FMG trading down 2.5% at A$16.87 as at 0123 GMT
    ** FMG down ~10% this year as of last close, vs a 4% decline
in the ASX 300 Metals & Mining index  .AXMM  
    

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))