Given the characters thrown up by the West Australian mining industry over the years, it is has never been an easy job being the ASX listings manager in Perth. And so it was for the incumbent, Ben Tippett, given the extraordinary work of billionaire Andrew Forrest and his Fortescue Metals Group this week. In between giving selective briefings to long-term favourite scribe Jennifer Hewett from The Australian Financial Review, Fortescue has now managed the following three ASX releases this week. Tuesday morning: a one-pager unveiling vague memorandum of understanding (MOU) with competitor Vale. Tuesday afternoon: another five paragraphs clarifying potential 5-15% investment by Vale in Fortescue. Wednesday morning: highly defensive response to ASX price query. There were 15 different stories or columns in the AFR today on Fortescue and the surging iron ore price, all of which started with the unprecedented 20% pop in the iron ore price on Monday. This would suggest there was a leak of the Vale-Fortescue MOU, which also sent Fortescue shares surging 24% on Monday, spurred on by margin calls against short-sellers. Yet, somehow, the Fortescue Q&A with the ASX, published this morning, began as follows:
ASX: Does Fortescue consider the information disclosed in the First Announcement to be information that a reasonable person would expect to have a material effect on the price or value of its securities?  Fortescue: No
Of course two of the world’s four biggest iron ore producers getting together is price-sensitive. Fortescue even labelled it as such with the red dollar sign next to its initial announcement, as you can see here. The Vale deal raises many questions. Is Twiggy prepared to give up control? After looking over the cliff in recent months, with record-low iron ore prices, there is nothing stopping him personally selling a 15% stake in Fortescue to Vale. The language all refers to selling existing shares to Vale, not doing a selective placement, as occurred when Chinese steel mill Hunan Valin came on the scene with its 15% stake. The rumours, speculation and scenario guessing is endless. Why issue a statement at 8.26am yesterday followed by a press briefing at 8.30am with no formal engagement with analysts who cover the stock? The stunning nature of yesterday morning’s announcement took everyone by surprise. There was the joint-venture blending deal, which was a big enough shock, but bigger was this suggestion: “The agreement also provides a framework for potential investment by Vale in Fortescue through a minority acquisition of shares on market and/or investment in current or future mining assets.” This simultaneously opens the door to everything and nothing. Chinese government competition regulators are already lining up to probe the arrangement and could very well oppose it. After banging the nationalistic drum for years, it is also amazing that Twiggy is now proposing a deal with Vale to take on BHP and Rio Tinto. A year ago he was playing the "Aussie battler card" and attacking BHP and Rio Tinto for selling out the industry, urging the federal government to "do something" and complaining about the policy of the two companies to produce as much ore as possible while driving down costs. A year on and the company and Forrest propose to climb into bed with the biggest non-Australian producer in Vale, which was also producing as much ore as possible as it could last year. A vague dalliance with Vale will attract regulatory attention across the world, and the ASX is absolutely right to go hard about the disclosure practices that unfolded over the past two days. ASIC may have lost previous expensive battles with Twiggy, but it should also weigh in on this one. The ASIC probe into Leighton and Hochtief share trading two years ago produced this amazingly detailed insight into all the communications. It would be very useful if ASIC and its equivalent regulator in Brazil could produce something similar to flesh out just how this FMG-Vale pseudo-marriage evolved.