Attempts to avoid the proposed tax on the earnings of super balances above $3 million or land taxes could leave self-funded retirees exposed to back-dated claims and ATO audits.
A weakness of the super sector is the number of funds that take DIY literally and shun professional input. But this might be changing as a growing number of new funds reach out for a helping hand.
US-China trade war could dampen Fortescue’s 2025 earnings
The mining giant Fortescue (ASX:FMG) – its share price closed at $18.51 yesterday, down 30 per cent for the past year – and its shareholders will be anxiously awaiting whether incoming US President Donald Trump follows through with his oft-repeated threat to impose higher tariffs on Chinese exports to the US.
While it remains unclear what this would mean, any move to add additional tariffs to Chinese imports, as well as ending the Middle Kingdom’s most-favoured nation trading status, would have global economic repercussions and the iron ore industry – Australia’s largest export earner – would not be immune.
China, as the world’s largest producer and exporter of stainless steel, has a healthy appetite for iron ore. And while it may be the third largest iron ore producing country, domestic supply cannot meet demand, forcing it to import more than 70 per cent of global seaborne iron ore trade.
This makes the iron ore market highly sensitive to fluctuations in China’s economy, particularly its property sector – a major user of steel – with its ongoing woes in recent years depressing prices.
Since March 1, 2024, the iron ore price has dipped from $US122 ($AU197) a tonne to close yesterday at $US98 ($AU158), having been as low as $US91 ($AU147) in September 2024 – a far cry from its $US220 ($AU356) price tag in mid-2021.
That said, Fortescue’s iron ore business remains the backbone of its profitability, and a key driver of shareholder returns. In the 2023-24 financial year, it shipped 191.6 million tonnes of iron ore, achieving an average revenue of $US103 ($AU166) a tonne. For 2024-25, the company aims to sustain similar shipment levels, ensuring a steady revenue stream.
While the iron ore market is volatile, Fortescue’s focus on high-grade products positions it well to meet the evolving needs of the steel industry, particularly as global decarbonisation efforts intensify.
Fortescue’s diversification strategy is another key area of interest for shareholders. The commissioning of the Iron Bridge magnetite project is a major milestone for 2025. It will supply the premium iron ore concentrate which commands higher prices and supports the shift to low-emission steelmaking. As Iron Bridge ramps up, it should contribute handsomely to the bottom line.
Beyond iron ore, Fortescue is expanding its exploration activities into critical minerals, including projects in Gabon, Argentina and Australia. The Belinga iron ore project in Gabon is particularly noteworthy, with potential for large-scale development. These initiatives aim to diversify Fortescue’s revenue streams and reduce reliance on traditional iron ore markets, providing long-term value for shareholders.
Fortescue’s pivot towards green energy is a transformative move that could unlock new growth opportunities. In 2024, the company outlined its commitment to achieving ‘real zero’ scope one and two emissions by 2030, with no reliance on voluntary carbon offsets. For shareholders, this decarbonisation strategy represents a forward-thinking approach to sustainability that aligns with global trends.
Other key projects include the Gladstone PEM50 green hydrogen project in Queensland, expected to begin production this year. Fortescue is also advancing other green hydrogen projects in the US, Norway and Brazil.
Critical for shareholders is Fortescue’s dividend policy. In 2024, the company maintained a 70 per cent payout ratio, distributing fully franked dividends totalling $AU1.97 a share. This represents a significant return to shareholders, with the value of 2024 dividends amounting to $AU6.1 billion. Shareholders can expect this commitment to continue in 2025, as Fortescue has a stated policy to pay out between 50 per cent and 80 per cent of its underlying net profit after tax.
Fortescue’s guidance indicates further dividend potential. With iron ore shipments projected between 190-200 million tonnes and ongoing operational efficiencies, shareholders can remain optimistic about stable or even increased payouts.
