Month: May 2022

Of all of the ASX lithium stocks on our share market, Vulcan Energy Resources Ltd (ASX: VUL) has certainly become one of the most popular. That tends to be what happens when a company goes from 20 cents a share (in 2020) to a high of $16.65 (September 2021), giving investors a return of over 8,000% in the process.

Today, Vulcan Energy shares have fallen away from the stupendous highs we saw last year. The company closed at $7.47 a share today.

But now that the company has stopped breaking new all-time highs, it might be a good time to ask some questions of this ASX lithium stock. So let’s go with ‘Do Vulcan Energy shares pay dividends?’.

Do Vulcan Energy shares pay out dividends?

Many ASX mining and resources companies on our share market pay dividends. Heck, some, like BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG), are famous for it. But that reputation does not extend to ASX lithium stocks. As we covered earlier this week, there aren’t too many ASX lithium stocks that even pay dividends. So is Vulcan Energy one of the lucky few?

Well, sadly no. Vulcan Energy shares do not currently pay a dividend. And nor have they ever.

What’s more, a quick look at the company’s books indicates that a dividend probably won’t happen anytime soon either. Its recently released quarterly cash flow report covering the three months to 31 March 2022 shows that Vulcan Energy’s net cash from operating activities was a loss of just over three million euros. For a company to be able to fund a dividend, it usually needs to be comfortably profitable and cash flow positive first.

So it looks as though income investors will have to wait at least a little longer to see a dividend come out of Vulcan Energy Resources shares.

The post Do Vulcan Energy shares pay dividends? appeared first on The Motley Fool Australia.

More reading

• Who wants to be a millionaire? If only you’d invested $10,000 in these ASX shares 10 years ago
• Why has the Vulcan share price tumbled 25% in a month?
• Vulcan share price pops 5% on future lithium expectations
• Here’s why ASX lithium stocks are rocketing higher today
• What will the lithium price be in 2025?

Motley Fool contributor Sebastian Bowen 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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The ASX nickel share Nico Resources Ltd (ASX: NC1) share price has spiked into the green today, peaking 23.68% higher in afternoon trade. Nico shares closed trading on Wednesday 15.79% higher at $1.10.

While there’s been no news from the $86.4 million company by market value today, its share price has surged 452% this year. Nico Resources first listed in mid-January.

A quick refresher on ASX nickel share Nico Resources

Nico is a mineral exploration and development company. It aims to grow and create value through development of mineral resource projects throughout Western Australia and South Australia.

Earlier in the year, Nico completed the purchase of a nickel asset portfolio. This was pursuant to a share sale and subscription agreement with Metals X Limited (ASX: MLX).

The acquisition gave the company a 100% legal and beneficial interest in the Wingellina and Claude Hills nickel projects located in WA and SA respectively.

Nico Resources is also 15% owned by Blackstone Resources Ltd (ASX: BSX).

Nickel still top-heavy

The price of nickel turned sharply in mid-March and has been softening ever since. It’s currently down more than 20% in the last month.

However, the nickel price still remains up 46% for the last 12 months. The surge comes amid tensions in Europe and a lumpy outlook for steel production out of China.

Moreover, the enormous spike in nickel – where prices thrust past US$48,000 per tonne – occurred after a short squeeze on the industrial metal, not unlike that seen in the Gamestop saga.

The spike was due to fears of a supply shock from Russia, one of the world’s top nickel producers. However, fears were soon calmed once traders regained control of the market and with the intervention of the London Metals Exchange (LME). It now trades at US$26,328 per tonne.

Nevertheless, prices remain top-heavy, especially considering supply woes haven’t been completely squashed. That’s amid weaker than expected economic data from China this week which has hurt the outlook for steel production. Nickel is a key ingredient in the production of stainless steel.

With that outlook, nickel players like Nico Resources are in a good position to benefit from the longer-term trend in the underlying market.

Nico Resources share price summary

Shares in Nico shot to fame early on, first exhibiting a gradual climb northward. The ASX nickel share spiked hard in March and then again in April.

On the latter occasion, the company released an investor presentation outlining its value proposition and upcoming projections.

The market for nickel remained strong in April, and investors no doubt were responsive to the company’s investor presentation given the reaction.

Shares shot to a high of $1.72 before turning sharply to eventually find a bottom at the 89.5 cent mark on Monday.

They’ve since rallied hard again and are now trading 23% higher to current levels.

The post Why did this ASX nickel share surge 23% today? appeared first on The Motley Fool Australia.

More reading

• Do Vulcan Energy shares pay dividends?
• 2 beaten down ASX tech shares analysts say have major upside potential
• Why is the Medibank share price struggling to gain ground in May?
• Why I think the EML share price is a long-term buy
• What’s dragging on ASX 200 energy shares like Santos today?

Motley Fool contributor Zach Bristow 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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Are you interested in adding some ASX tech shares to your portfolio after the market selloff?

Two ASX tech shares that could be worth considering are listed below. Here’s why analysts are positive on them:

Life360 Inc (ASX: 360)

The first ASX tech share to look at is Life360. This growing technology company is responsible for the Life360 mobile app, which is a market leading app for families.

It has been growing at a rapid rate in recent years and has continued this positive trend in FY 2022. During the first quarter, the company revealed that its global monthly active users reached 38.3 million at the end of March. This was up 36% year on year and underpinned a 73% increase in annualised monthly revenue to US$166.1 million.

And while it continues to operate at a loss, analysts at Bell Potter believe investors should look beyond this. Particularly given its hefty cash balance and plans to be cash flow positive in 2023.

It is for this reason that the broker believes the Life360 share price has been oversold.

The broker said: “[Life360] remains a key pick and we believe has been oversold as, despite currently being loss making, has ample cash to fund it through to cash flow breakeven or positive in 2023 or 2024 while maintaining strong top line revenue growth and realising the synergy benefits from the recent Tile acquisition.”

Bell Potter has a buy rating and $7.50 price target on its shares. This implies potential upside of over 100%.

Xero Limited (ASX: XRO)

Another ASX tech share that has been sold off is Xero. The leading cloud-based business and accounting software provider’s shares are down 40% since the start of the year due to weakness in the tech sector.

While this is disappointing, analysts at Goldman Sachs believe this could be a buying opportunity for long term focused investors. Particularly given its view that Xero is a “compelling global growth story” with potential for multi-decade strong growth.

Goldman Sachs recently reiterated its buy rating on its shares with a $118.00 price target. This suggest potential upside of 34% for investors over the next 12 months.

The post 2 beaten down ASX tech shares analysts say have major upside potential appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to sell today
• Why this fund manager is backing Xero shares for the rest of 2022
• ‘Future-proof your portfolio’: experts pick 3 quality growth ASX shares to buy
• Leading brokers name 3 ASX shares to buy today
• Why are ASX 200 tech shares having such a stellar start to the week?

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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The Medibank Private Ltd (ASX: MPL) share price has failed to make a move in the past three weeks.

Despite the company delivering a positive update at the Macquarie Australia Conference earlier this month, Medibank shares are travelling sideways.

For the recent period, Medibank shares are fetching just one cent more than they did at market close on 29 April.

Today, the private health insurance company’s shares closed at $3.21, down 0.93% for the day.

What’s happened to the Medibank share price in May?

Amid recent broader market weakness, the Medibank share price has been weighed down regardless of the company reaffirming its FY22 outlook.

Management noted in its latest presentation that private health insurance participation growth remains strong. This is due to more people continuing to prioritise their health and wellbeing, the company said.

Notably, Medibank Private has recorded six consecutive quarters of industry policyholder growth.

New-to-industry and younger groups are becoming major contributors to growth which are positive signs for industry sustainability.

Medibank stated it’s on track to achieve 3.1% to 3.3% of policyholder growth in FY22.

Furthermore, the underlying average net claims expense per policy unit is forecast to be around 2.3% among resident policyholders.

The company advised it will deliver $15 million in productivity savings. In total, management expenses are predicted to come in at roughly $530 million for the full year.

Is this a buying opportunity?

One broker weighed in on the Medibank share price at the start of this month.

The team at Macquarie cut its 12-month price target by 1.5 % to $3.20 for Medibank shares.

It appears analysts have a similar view to investors’ perceived value of the company’s shares.

Looking further back, Citi has the most bullish outlook for the private health insurer’s shares, upgrading them to a buy.

The broker also raised its rating by 4.3% to $3.65 per share following the company’s half year results.

Based on today’s price, this implies a potential upside of around 13.7%.

The post Why is the Medibank share price struggling to gain ground in May? appeared first on The Motley Fool Australia.

More reading

• Own Medibank shares? Here’s what to watch over the coming months
• How big will the Medibank dividend be in 2022?
• The Medibank share price has leapt 5% in a month. Could it be on the comeback trail in May?
• This ASX 200 healthcare share has a fully franked dividend yield over 4% right now
• Why is the Medibank share price trailing NIB over the past year?

Motley Fool contributor Aaron Teboneras 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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After a heavy fall in the EML Payments Ltd (ASX: EML) share price, I think it’s looking like good value for the long term.

Since the start of 2022, EML shares have fallen by around 55%. Since the end of April 2021, EML has fallen by more than 70%.

Neverthless, I think the business looks compelling for the long term at its current valuation.

What’s going on with the EML share price?

There may have been (at least) three different factors that have led to the decline of the EML share price.

A while ago, there was a major concern that the Central Bank of Ireland (CBI) was going to significantly limit the growth potential of EML in Europe amid anti-money laundering and counter-terrorism financing concerns.

Next, there has been intense market focus on the rise of global inflation, leading to worries about how strongly central banks around the world will have to respond to bring it under control. This has triggered plenty of volatility for investors to contend with.

The final thing is what investors may have seen as a negative, that is, the company’s recent update for the period to 31 March 2022.

EML said that while revenue was up 21% to $59.8 million, profitability didn’t do as well.

Quarterly gross profit only went up 17% to $42.2 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) dropped by 14% to $13.6 million and underlying net profit after tax (NPATA) dropped 22% to $8.1 million.

This meant that in the FY22 year to date, operating profit was now lower than the prior corresponding period (pcp). Underlying EBITDA fell 8% to $40.3 million and underlying NPATA declined 7% to $21.2 million.

So, there have been reasons for some investors to be negative in recent times.

But I think the long-term positives can really outweigh the negatives on the EML share price.

Why I like the business

EML shares are now at around the same level as the bottom of the COVID-19 crash in 2020 when there were major questions about how ‘normal life’ would proceed and what this meant for a business that earned a lot from shopping centre physical gift cards.

I also believe that the Central Bank of Ireland issue isn’t anywhere near as detrimental to growth as it could have been.

Higher interest rates could be quite helpful for EML’s profitability, and the EML share price, as it increases earnings from the cash that it holds. It could earn in the tens of millions in the next few years from higher rates, depending on how high interest rates go. Even if EML’s core earnings aren’t as profitable as before (in percentage terms), the higher interest earnings could be a real boost to the bottom line.

The longer-term outlook for the growth of digital payments looks good to me. As well, shopping centre volumes could grow as COVID-19 impacts subside.

I also like the move by EML Payments to enter the European employee benefits market with Up Spain. EML could also grow in other countries where other parts of the Up Group operate. Globally, the employee benefits market is worth over $88 billion and is expected to grow by $20 billion between 2021 to 2025, with Europe representing 35% of the market.

The larger scale should help the operating leverage and profitability of EML.

Finally, I think EML could be a takeover target at this price. If the EML share price doesn’t recover in the near term, then private equity groups like Bain Capital could put in an offer that’s high enough, compared to today’s price, to be accepted by shareholders.

EML recently confirmed that it had been in talks with Bain Capital but those discussions have ceased. However, this shows EML is seemingly happy to talk to interested parties.

The post Why I think the EML share price is a long-term buy appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• EML share price pummelled: Here’s why this expert sees 100% upside
• These are the 10 most shorted ASX shares
• Why are EML shares making news this week?
• These were the worst performing ASX 200 shares in April

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended EML Payments. The Motley Fool Australia has positions in and has recommended EML Payments. 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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ASX energy shares like Santos Ltd (ASX: STO) are struggling to make gains today even as the S&P/ASX 200 Index (ASX: XJO) rallied to a near three-week high.

There could be a few reasons for the underperformance of the sector, and the federal election may be one of them.

Australia will find out who will be running the country by next week and that can spell trouble.

How the federal election is weighing on ASX 200 energy shares

This is particularly so if we get a minority government or hung parliament as the major parties might be forced to adopt more radical climate policies that could hurt ASX 200 energy shares.

Santos chief executive Kevin Gallaher is one ringing the warning bells. He is warning the major parties against “knee-jerk reactions“, reported The Australian.

Given how tight the polls are looking three days out from the election, the risks cannot be quickly dismissed. There could even be a temptation for minor parties or the independents to demand Australia follow the lead of the US.

Industry’s warning against knee-jerk populist reaction

Gallagher told the APPEA energy conference today:

My request is no knee-jerk reactions and there‘s no big Biden style policy announcements on day one closing things down because I think that would be very disruptive.

That would not help with the energy transition.

US President Joe Biden introduced a ban on new oil and gas leases after coming to office. There is also a push to hike oil and gas royalties in the country to compensate for higher climate costs.

Both the Coalition and Labor have committed to net zero by 2050. But the Greens and many independent candidates are demanding even more aggressive action on climate change.

Oil price slide impacting Santos and other ASX 200 energy shares

But it isn’t only political risks that are rattling ASX 200 energy shares. The drop in the oil price following the previous day’s big rally is also putting a cloud over the sector.

The Brent crude benchmark fell 1.2% to US$112.55 a barrel, while the West Texas Intermediate (WTI) lost 0.2% to US$113.66 a barrel.

Against this backdrop, the Woodside Petroleum Limited (ASX: WPL) share price slipped 1.2% to $30.73 and the Beach Energy Ltd (ASX: BPT) surrendered 2% to $1.70 at the time of writing.

The Santos share price is faring a little better as it dipped 0.1% to $8.24. But it’s still being left behind as the ASX 200 index jumped 0.8%.

Outlook for ASX 200 energy shares

Shareholders shouldn’t feel too dismayed though. Most analysts are expecting the oil price to stay firm this year due to geopolitical factors.

Also, the Woodside and Beach Energy share prices have jumped around 30% each over the past year, while Santos is up 15%.

In contrast, the top 200 benchmark is barely in the black over the same period.

The post What’s dragging on ASX 200 energy shares like Santos today? appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• ASX 200 energy shares in focus amid frightening global supply crisis
• ASX 200 midday update: BlueScope and Fortescue rise, Boral tumbles
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today

Motley Fool contributor Brendon Lau has positions in Santos Limited. 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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The Aurora Energy Metals Ltd (ASX: 1AE) is enjoying a strong debut on the ASX today.

The explorer’s share price is swapping hands at 25.56 cents, up 27.5%, nearing the close on its first day of trading. Earlier, the company’s share price surged 35% higher. In comparison, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.81%.

Let’s take a look at this ASX lithium share in more detail.

Uranium and lithium explorer

Aurora is an Australian company exploring uranium and lithium at the Aurora Energy Metals Project in Oregon, USA.

The company raised $8 million in its initial public offering (IPO). A total of 40 million ordinary shares were issued at 20 cents per share.

Aurora will use these funds for more exploration and development activities at the Oregon project. The company hopes to define the lithium resource and grow the uranium mineral resource.

Commenting on the ASX debut, managing director Greg Cochran said:

The Aurora Energy Metals Project offers investors two bites at the clean-energy pie.

We will look to grow the well-defined, shallow uranium resource hosted in the basement and conduct techno-economic studies, whilst following up the significant lakebed sediment-hosted lithium mineralisation that surrounds and overlies it.

We are excited by the strong response that we had to the capital raising from both retail and institutional investors.

The project is located within an area home to two of the biggest lithium deposits in the United States that Jindalee Resources (ASX: JRL) and Lithium Americas (NYSE: LAC) are exploring nearby.

Aurora has a market capitalisation of about $30.6 million based on the current share price.

The post Aurora Energy Metals share price rockets 35% on ASX debut appeared first on The Motley Fool Australia.

More reading

• Why I think the EML share price is a long-term buy
• What’s dragging on ASX 200 energy shares like Santos today?
• Why Boral, Eagers Automotive, PolyNovo, and Serko shares are dropping
• Can ASX 200 banks really see a 15% profit jump if the cash rate hits 1%?
• Fortescue share price pushes higher following leadership changes

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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The S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and is storming higher. In afternoon trade, the benchmark index is up 0.8% to 7,168.5 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Boral Limited (ASX: BLD)

The Boral share price is down 3% to $3.11. Investors have been selling this building products company’s shares after it revealed that its earnings have taken a hit from recent inclement weather and higher energy prices. This means that Boral will fall short of its underlying earnings before interest and tax (EBIT) guidance of $145 million and $155 million.

Eagers Automotive Ltd (ASX: APE)

The Eagers Automotive share price is down 3% to $11.50. This morning the automotive retailer released a market update. While that update revealed that demand is very strong, the lack of supply of vehicles is impacting its performance. As a result, its half-year profits are expected to be down ~13% compared to the prior corresponding period.

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price is down 5% to $1.23. This share price weakness may be due to ASIC data showing that short sellers have continued to increase their holdings despite some rampant insider buying from the company’s Chairman, David Williams. PolyNovo’s short interest now stands at 10.87%.

Serko Ltd (ASX: SKO)

The Serko share price is down 5% to $4.07. This morning this travel technology company released its full year results for FY 2022. Serko revealed a 17% increase in segment revenue to NZ$19.8 million, which was within its guidance range of NZ$18.5 million to NZ$20.5 million. However, its net losses grew even quicker at 22% to NZ$36 million.

The post Why Boral, Eagers Automotive, PolyNovo, and Serko shares are dropping appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: BlueScope and Fortescue rise, Boral tumbles
• Here’s why the Eagers share price is sliding today
• Boral share price down 3% on earnings hit
• These are the 10 most shorted ASX shares
• What’s going on with the Polynovo share price today?

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 positions in and has recommended POLYNOVO FPO and Serko Ltd. The Motley Fool Australia has recommended Serko Ltd. 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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The new year had originally been kind to ASX 200 banking shares with the sector posting strong gains in the early months.

However, the boon was short-lived, with the Russian invasion of Ukraine and the resulting sanctions sending shockwaves throughout the global banking world.

The Vaneck Australian Banks ETF (ASX: MVB), an exchange traded fund (ETF) tracking the sector, has wavered these past few months but managed to hold onto a 3% gain this year to date.

However, the banking sector is perhaps unlike any other. It puts flesh on the skeleton of the economy, facilitates credit creation, and underpins the very workings of the financial world.

Hence, whilst the world undergoes somewhat of a transformation, with rampant commodity inflation and geopolitical tensions, one might be clever to hone in on banks within the ASX 200.

Profit jump for the banks?

Bloomberg Intelligence analysts Matt Ingram and Jack Baxter reckon Aussie banks’ profits may be 15% higher if the RBA moves as expected.

What they mean is if the RBA hikes the official cash rate in its bid to rein in inflation, this could flow onto other interest rates in the economy.

Currently, the cash rate is resting at 0.35% – or 35 basis points – meaning it would need to spike another 65 basis points to reach the 1% mark.

Such a move would be a net positive to the banking sector’s earnings profile, Bloomberg analysts say, given its sensitivity to the interest rate cycle.

Ingram and Baxter wrote:

Australian banks’ profits may be up to 15% higher than consensus as soon as 1HFY23 with CBA and Westpac gaining the most if the December 2022 RBA cash rate hits 1% as forecast by Bloomberg Economics, we calculate.

Variable home-lending [return on equity] ROEs could hit 14% under this scenario, but the headwind from dearer wholesale funding may offset this somewhat.

Specifically, the duo reckons the Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC) could be major risers if the RBA lifts the cash rate to 1%, resulting in a large profit jump for both banks.

They forecast:

CBA and Westpac 1H23 earnings may be 12-15% higher than consensus estimates if the RBA lifts the cash rate over 100 basis points by December 2023 as expected by Bloomberg Economics, topping Australia New Zealand Baking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). Westpac and CBA have a lower proportion of short-term wholesale funding and much higher interest-rate sensitive deposits, increasing leverage to rising interest rates.

Earlier in the month, the analysts predicted that ASX 200 banks would see a rise of up to 15% in returns on discounted variable rate loans if the RBA hiked rates over 1%.

That’s compared to “a paltry 2-3% at present”, the pair calculated.

As to where the banking sector will head next is anyone’s guess, given the number of crosscurrents currently feeding into Australian markets.

The post Can ASX 200 banks really see a 15% profit jump if the cash rate hits 1%? appeared first on The Motley Fool Australia.

More reading

• Experts name 2 ASX dividend shares to buy with big fully franked yields
• Why I think NAB shares could be the smartest big four ASX bank to buy
• Is the Telstra share price cheap compared to other ASX 200 shares?
• Latest Westpac review notes progress but flags ‘bank’s difficulty in staying the course’
• Already down 7% in 2022, is the ANZ share price cheap?

Motley Fool contributor Zach Bristow 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 recommended Westpac Banking Corporation. 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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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.

More reading

• ASX 200 midday update: BlueScope and Fortescue rise, Boral tumbles
• Why I think these are the best ASX dividend shares to buy right now
• Fortescue share price on watch after Twiggy returns to top job
• Which ASX 200 mining share has the highest dividend yield in May?
• 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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