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Why is the FMG share price rebounding today?

Posted: 18 May 2022 1:51 pm
News
FMG-shares-18May_1800x1000_Finder

Shares in mining giant Fortescue Metals are up more than 24% in the last 6 months, but have fallen in recent times.

Shares in iron ore major Fortescue Metals Group (ASX: FMG) are among the top traded shares on the ASX on Wednesday. The stock jumped more than 2% in early trading and was still up 1.3% at $19.62 at the time of writing.

Why is the FMG stock price on a high today?

Some of the gains in Fortescue Metals' share price no doubt reflect investor relief after China announced this week it would reopen financial capital Shanghai from 1 June after managing to gain control over the COVID outbreak that has sparked lockdowns and widely affected business activity.

Shares in rival iron ore miners BHP and Rio Tinto were also up 2.5% and 1.5% respectively.

But Fortescue Metals' shares are also being cheered after Australia's third biggest iron ore exporter on Wednesday announced wide ranging changes to its leadership team.

In a surprise announcement, the company said founder Andrew Forrest will take back the reins for the first time since 2011 after being appointed as the executive chairman.

Other key appointments include former GE executive Mark Hutchinson coming in as CEO of the company's green energy arm, Fortescue Future Industries, and former AGL boss Andy Vesey joining FFI as its head of energy transition projects.

The company had already announced former RBA deputy governor Guy Debelle as the next chief financial officer of FFI in March.

Green push

Fortescue Metals has been conducting an extensive global search for a CEO since current CEO Elizabeth Gaines announced in December that she would step down after less than 4 years in the role. It is still searching for an executive to head its key iron ore division but the latest move gives top shareholder Andrew Forrest full control of the business in the interim.

This also comes amid a massive push by Forrest to diversify into renewable energy at a time when global decarbonisation efforts have been under the spotlight.

In recent months, FFI has announced the construction of a green energy manufacturing centre in Queensland, signed agreements to potentially become the UK's biggest supplier of green hydrogen, and outlined plans to develop a number of hydropower and geothermal energy projects in Papua New Guinea.

"Today is a further progression of Fortescue's transition to a global, green renewable and resources company. This growth and value to shareholders is already evident with our shareholder base doubling since FFI was launched," Mr Forrest said in a statement to the ASX.

"We are doing the hard work to genuinely decarbonise Fortescue, avoiding the temptation we see all around us to greenwash," he added.

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