The Fortescue Metals Group Limited (ASX: FMG) share price has fallen 19% over the past month.
After such a rough time, can things get better over the 2023 financial year?
Commodity prices can change really quickly, which can hurt or help investor sentiment. The iron ore price has fallen by around US$20 per tonne since the beginning of June 2022, so perhaps it's not surprising that the Fortescue share price has dropped.
The company can't do much about what happens with the iron ore price. However, there are other things that the company is doing which could.
Iron Bridge
The costly Iron Bridge Magnetite project will deliver 22 million tonnes (mt) per year of high grade iron. This could help the Fortescue share price.
Fortescue says this is a strategic project because it will enable Fortescue to provide an "enhanced product range" and increase its production and shipping capacity.
The company said that the project has made significant progress while managing the challenges relating to COVID-19, supply chain constraints and inflation.
The capital estimated cost is for a range of between US$3.6 billion to US$3.8 billion, with Fortescue's share being between US$2.7 billion to US$2.9 billion.
First production is expected in the three months to March 2023, a bit later than the previously scheduled date of December 2022.
Fortescue Future Industries (FFI)
FFI is the Fortescue division that is aiming to take a global leadership position in green energy and energy technology. It's committed to 'zero-carbon green hydrogen'.
An important part of its green ambitions is Gladstone, Queensland's green energy manufacturing centre. Construction has already started, but making progress on this facility could help build investor confidence in the company's abilities to deliver on its plans. The first stage development is an electrolyser manufacturing facility with an initial capacity of two gigawatts per annum and an investment of up to US$83 million.
FFI has signed important partnerships recently, including with E.ON to supply up to 5mt of green hydrogen to Europe by 2030. It has also established a working alliance with Airbus to facilitate the decarbonisation of the aviation industry with green hydrogen.
If Fortescue signs more deals that take up more of its future green hydrogen production, that could help the Fortescue share price.
Broker price targets
A price target is where a broker believes the Fortescue share price will be in 12 months from now.
Let's have a look at some of those.
Macquarie is neutral on the business, with a price target of $18.
The broker Ord Minnett has a hold rating on the business, with a price target of $18 as well.
Morgan Stanley is a lot less optimistic. It has an underweight rating, which is similar to a sell. The price target is $14.20, which implies a fall of around 18%.
However, the ASX mining share is expected to pay a large dividend yield in FY23. Ord Minnett currently has pencilled in a grossed-up dividend yield of 14.8%.
