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Why the Fortescue (ASX:FMG) share price is shooting up more than 5% today

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Fortescue Metals Group Limited (ASX: FMG) has seen a lot of positive news recently. Chief among these has been a multi-billion dollar export deal with China. In addition, it declared the  intention to become a world leader in renewable technologies, and there is evidence of more progress at its Iron Bridge project. At the time of writing, the Fortescue share price is trading up 5.78% at $17.93. 

Fortescue CEO Andrew Forrest has a long track record of delivering on what he sets out to achieve. Not only that, but he has also shown a talent for picking up on Future trends. His nickel mine, Murrin-Murrin, remains profitable as the world turns more to battery metals like nickel. Moreover, iron ore has proven resilient in the face of a global pandemic, and is one of the few areas where China/Australia trade tensions have not surfaced.

The green tailwinds for the Fortescue share price

At the company’s AGM, Mr Forrest announced a new vision for the company in renewable energy. If he achieves his vision, Andrew Forrest would see Fortescue grow into an energy giant comparable with Chevron Corporation (NYSE: CVX) and Total SE (EPA: FP). 

“Consider perhaps that this first target of 235 gigawatts of energy already would make Fortescue one of the largest energy companies in the world but will be financed conservatively and away from our balance sheet,” he said.

Delivering on its promises rapidly, the company announced the start of drilling in a Tasmanian green ammonia project, fully energised by renewable energy. The company believes Fortescue will lead a stampede of resource companies into renewables.

A mountain of cash

Fortescue’s revenue per tonne increased by 31% compared with the June quarter. Meanwhile, the average benchmark price increased 27% over the same period. Moreover, the company secured 12 new agreements with Chinese steel mill. The 12 memoranda of understanding (MoU) are valued at around $US3-4 billion ($4.1-$5.5 billion). This had little impact on the Fortescue share price when it occurred.

Lastly, ABB Ltd. (SWX: ABBN) has won a contract for $35 million to provide variable speed drives and motors at its Iron Bridge project in Western Australia. In addition, both Iron Bridge and Eliwana remain on time and on budget.

Foolish takeaway

Fortescue Metals Group has proven itself to be a capable operator by delivering quarter after quarter of strong results. This, coupled with its aggressive push into green renewables energy sources, and the progress of major projects; show that the company has the wind at its back. The Fortescue share price has risen by more than 7% in the past 5 days trading. 

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Motley Fool contributor Daryl Mather owns shares of Fortescue Metals Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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