It has been a positive day for the Fortescue Metals Group Limited (ASX: FMG) share price on Wednesday.
In afternoon trade, the mining giant’s shares are up 1.5% to $19.67.
Why is the Fortescue share price rising?
The catalyst for the rise in the Fortescue share price on Wednesday has been the announcement of key leadership changes.
These changes are part of the company’s plan to transition from one of the world’s biggest contributors of carbon emissions to a global green renewables and resources company.
One change will see the company’s founder, Dr Andrew “Twiggy” Forrest AO, return as Executive Chairman. This will see Dr Forrest oversee the iron ore business for an interim period to help drive the company’s transition when its current CEO, Elizabeth Gaines, steps down in August.
Dr Forrest also revealed that the company has appointed a team of executives to key positions within the Fortescue Future Industries (FFI) business to support the transition.
This includes Dr Mark Hutchinson, former President and CEO of General Electric (GE) Europe, joining as the CEO of FFI and Andrew Vesey, former CEO of AGL Energy Ltd (ASX: AGL), joining as FFI’s Head of Energy Transition Projects.
What else?
The FFI business has been criticised by many analysts who believe it will destroy shareholder value.
For example, Goldman Sachs recently commented: “We think decarbonising the Pilbara could cost FMG over US$7bn and requires +US$50/t carbon or a green premia to be NPV positive. […] In order to fund FFI projects, we think FMG will need to reduce their dividend payout ratio from 80% to 50% from 2022 onwards.”
However, Dr Forrest expects the business to create value for shareholders.
He said: “We will prove that going green has a fabulous and profitable future, providing significant additional value for shareholders by ramping up innovative and game changing green technologies, green operating know-how and sharing that and our future massive green fuel supply to the world.”
The post Fortescue share price pushes higher following leadership changes appeared first on The Motley Fool Australia.
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More reading
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- Why I think these are the best ASX dividend shares to buy right now
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- Woodside share price lifts despite Twiggy’s latest ‘greenwashing’ accusations
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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