The Fortescue Metals Group Limited (ASX: FMG) share price has been performing well in July 2021. Since the start of the month it has gone up by around 10%.
Fortescue is one of the ASX's biggest iron ore miners. It's actually one of the biggest companies, of any sector, on the ASX with a market capitalisation of $79 billion according to the ASX.
The iron ore price is a major contributor to the profit that Fortescue can make each year. The iron ore price is close to its 2021 high with it currently at just over US$220 per tonne. A year ago it was around half that price.
Nicholas Snowdon, head of base metals and bulks research at Goldman Sachs, was recently talking at the Singapore Iron Ore Forum according to reporting by CNBC. Mr Snowdon said that prices are high with very strong demand and supply isn't being increased by the miners. Inventories are also low.
The Goldman Sachs analyst suggested that it won't be until at least 2023 that iron ore prices go back to more normal levels. He suggested there won't be a price collapse and that prices could stay between US$100 to US$150 per tonne. He also said:
It would be wrong to say that the bull market for iron ore, you know, is on the cusp of ending.
Fortescue Future Industries (FFI)
In recent weeks, FFI has been making the headlines.
DRC
About a month ago the business referred to media talk regarding the company's discussions with the Government of the Democratic Republic of Congo on the exclusive rights to develop the suite of Grand Inga Hydroelectric Projects, including the Matadi and Pioka projects.
FFI revealed that the DRC Government has invited interested corporations and governments to contact FFI if they have investment or service interest in the Inga Projects on the condition that personnel will be trained and sourced from the DRC as Fortescue has done in Australia.
The company confirmed that discussions have taken place with the DRC Government about the grant of exclusive rights to develop the Grand Inga suite of projects. No formal binding agreement has been concluded yet.
Green initiatives
Fortescue also updated investors on 6 July 2021 about how its initial decarbonisation projects are going.
It said it had achieved successful combustion of ammonia in a locomotive fuel, with a pathway to achieve completely renewable green fuel.
FFI has completed the design and construction of a combustion testing device for large marine (ship) engines, with pilot test work underway and a path to achieve completely renewable green shipping fuel. It has also finalised design of a next generation ore carrier (ship) that will consume renewable green ammonia.
It's testing battery cells which aim to be used on Fortescue haul trucks.
The design and construction of hydrogen powered haul tracks and drill rigs for technology demonstration has been completed, with systems testing underway.
FFI has also achieved successful production of high purity (more than 97%) green iron ore from Fortescue ores at low temperature in a continuous flow process.
The final update was that it has achieved a successful initial trial to use waste from the green iron processes (noted above), with other "easily sourced materials", to make green cement.
Where to next for the Fortescue Metals share price?
The brokers at Macquarie Group Ltd (ASX: MQG) are one of the few brokers that still have a buy rating on Fortescue and a share price target above the current share price.
Macquarie's price target for Fortescue is $27.
