Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — 8th China International Steel & Raw Materials Conference 2008
49 slides from Fortescue's conference presentation, Oct 23, 2008
Slide 1: Balancing the Supply Demand Curve
Fortescue Metals Group Balancing the Supply Demand Curve For personal use only 8th China International Steel & Raw Materials Conference Qingdao, October 2008 The New Force in Iron Ore
Slide 2: Disclaimer
Fortescue Metals Group Ltd For personal use only DISCLAIMER Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this p
Slide 3: FMG Overview
FMG Overview For personal use only Multi-decade China market growth drives FMG strategy • Long term growth in China and Asia drives FMG strategy • FMG has major reserves and resources with very strong exploration upside • World class production assets commencing in the bottom quartile of cost curve
Slide 4: Further Promising Long-Term Growth Prospects for China
Further Promising Long-Term Growth Prospects for China For personal use only Industrial production index Japan and Korea provide a clear roadmap 1,200 to China’s potential – China early in its growth cycle 1,000 China’s economic growth averaged over 10% per annum from 2003 to 2007 Index, base ye
Slide 5: History remains the best guide to the future
History remains the best guide to the future For personal use only
Slide 6: China and India Urbanisation
For personal use only million people 0 5 10 15 20 25 30 1950-55 35 1955-60 1960-65 India 1965-70 China 1970-75 1975-80 1980-85 1985-90 1990-95 1995-00 year 2000-05 2005-10f China and India Urbanisation 2010-15f 2015-20f 2020-25f 2025-30f 2030-35f Source: United Nations, McKinsey, Macquarie Research,
Slide 7: Chinese Urbanisation
Chinese Urbanisation For personal use only China is the perfect example of an urbanising country where raw material demand has increased significantly due to its population shifting to cities from rural areas Urbanisation Curves Chinese Population % Population Urban Million People 90 825 811 805 7
Slide 8: Growth rate in Chinese iron ore production
For personal use only Monthly ROM Production (Mt) 0 10 20 30 40 50 60 70 80 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Source: Morgan Stanley growth 2004-06 Oct-05 Strong production slowed sharply in 2007-08 Jan-06 Apr-06 Jul-06 Oct-06 Ja
Slide 9: China requires Australia to recover Market Share
China requires Australia to recover Market Share Chinese Imports by Source For personal use only 80.00% Infrastructure constraints limits 70.00% Australia, leads to falling market share 60.00% 50.00% Aust Brazil 40.00% India S.Africa 30.00% Others 20.00% 10.00% 0.00% est Year Source: Tex Report; FMG
Slide 10: Proven Track Record in Project Management
Proven Track Record in Project Management For personal use only From Concept To Reality Fortescue Mine Site - 2006 Fortescue Mine Site - 2008 FMG built its major infrastructure faster than any other mining company has ever done before Fortescue Rail Site - 2007 Fortescue Rail Site - 2008 Fortescue P
Slide 11: State-of-the-art Mining operations
State-of-the-art Mining operations For personal use only Target - Lowest cost, highest efficiency in the Pilbara Excavator in Overburden action trucks Surface miner in action OVERBURDEN ORE BODY Ore trucks ORE BODY
Slide 12: Cloudbreak time lapse of construction
Cloudbreak time lapse of construction 4 June 2007 to 18 July 2008 For personal use only
Slide 13: State-of-the-art Rail operations
State-of-the-art Rail operations For personal use only Target - Lowest cost transport in the Pilbara Rail • Clean sheet design captures best of existing technology and takes it to the next step: – Bigger carrying capacity – Electronic braking system – Aerodynamics • 40 tonne axle loads • Low centre
Slide 14: State-of-the-art Port operations
State-of-the-art Port operations For personal use only Target - Lowest cost transport in the Pilbara Port • Significant expansion area • Highly automated • Extensive use of conveyors • Largest shiploaders in Australia
Slide 15: Port time lapse of construction
Port time lapse of construction 8 May 2007 to 15 May 2008 For personal use only
Slide 16: The growth engines of Asia need the Pilbara
The growth engines of Asia need the Pilbara For personal use only • No iron ore major has the expansion leverage of Fortescue • Australia is the most competitive supplier to Asia ¾ Lowest Sovereign Risk ¾ Best Location
Slide 17: Iron Ore Cash Costs for 2009
For personal use only US$/dry tonne in real terms 0 10 20 30 40 50 60 70 80 90 0 Kumba Iron Ore non-Agglomerated CSN non-Agglomerated Fuel 100 Labour Royalty Supplies Electricity Transport Port Loading Maintenance CVRD non-Agglomerated 200 300 Fortescue Metals non-Agglomerated 400 Rio Tinto non-Aggl
Slide 18: Project pipeline underpinned by geology
Project pipeline underpinned by geology For personal use only • The largest bedrock hosted iron ore discovery in Australia • Over 1.6billion tonnes of reserves defined • New exploration (Chichester only) 1.8 Bt – target only • Total reserves, resources and targets (Chichester only) under current dri
Slide 19: FMG Pilbara Holdings Dwarfs Others
FMG Pilbara Holdings Dwarfs Others For personal use only FMG – 52,000 sq. km, Rio – 11,000 sq. km, (Robe 5,000 sq.km) BHP – 6,500 sq. km
Slide 20: Fortescue's first commercial shipments arrive in China
Fortescue’s first commercial shipments arrive in China –May/June 2008 For personal use only
Slide 21: Fortescue's first commercial shipments arrive in China
Fortescue’s first commercial shipments arrive in China –May/June 2008 For personal use only
Slide 22: Product Acceptance
Product Acceptance For personal use only Actual shipments as at end September 2008: – 8.7mt shipped, 53 ships to 27 customers – Cargo value to date more than US$661m – Fe and SiO2 on target, Higher calcined Fe – Customers are reporting very strong results from FMG ores in their blast furnace blend –
Slide 23: Industrial Test Results from FMG Major Customers
Industrial Test Results from FMG Major Customers so far … For personal use only Rocket Fines Replacing Brazilian Fines & MAC Fines in the Sinter Blend Project Yield Sinter Speed Productivity Fuel Tumble Index Return % mm/min t/m2.h kg/t % Balance Base Blend 68.84 19.34 1.232 72.80 67.47 0.92 Replaci
Slide 24: Industrial Test Results from FMG Major Customers
Industrial Test Results from FMG Major Customers so far … For personal use only Sinter Blend Brazilian Domestic Others Canadian Indian Iron FMG Other MGI Total Fines Concentrate Concentrate Fines Scale Rocket Fines Fines Fines 20 14 20 5 3 4 22 2 10 100 Major Indicators Daily Production t Tumble Ind
Slide 25: Why are FMG Fines so good?
Why are FMG Fines so good? For personal use only • High calcined iron • Low contaminants • Coarse size with low ultrafines • Very fast sintering speed/high production rate (“Fires like a rocket!”) • Mills can use it up to 50% of a blend, versus 15% maximum for MAC, 35% Pilbara Blend • Less sensitive
Slide 26: Exploration - 4.1 Billion tonnes in years
Exploration - 4.1 Billion tonnes in 4 years For personal use only • Christmas Creek drilling commenced May 2004; Cloudbreak, November 2004, Solomon Drilling commenced June 2007 • In-ground resource of 4.1 billion tonnes • Reserves now 1.65 billion tonnes • Discovery cost under 2 cents per tonne • Th
Slide 27: Project Pipeline development areas
Project Pipeline development areas will create a large iron ore export operation For personal use only FMG Chichester project Western CID Southern Pilbara Eastern Pilbara
Slide 28: Hamersley Group Stratigraphy reference section
BHPB Hamersley Group Stratigraphy reference section Mt Whaleback – Regional For personal use only Macroband Lateral Continuity Type outcrop – Wittenoom Gorge Hamersley Iron Brockman 2 reference section Tom Price 0km 19 50km 75km 17 0k 4W Gorge Ophthalmia Range m vertical scale ~ 50 m
Slide 29: Pilbara resources and targets which underpin the project pipeline
Pilbara resources and targets which underpin the project pipeline For personal use only Current Current Further Total Area Resources* Targets Potential Upside Chichester Range 2.45 1.8 1 5.25 Solomon 1.7 2 2 5.7 Jeerinah Anticline 1 1.5 2.5 Western CID 1 1 2 Southern Pilbara 0.5 0.5 1 Eastern Pilbar
Slide 30: Australia's leading mining and infrastructure operations team
Fortescue has Australia’s leading mining and infrastructure operations team For personal use only From Concept To Reality Fortescue Mine Site - 2007 Fortescue Mine Site - 2008
Slide 31: Pilbara's longest corporate airfield
Pilbara’s longest corporate airfield For personal use only
Slide 32: Surface miners hard at work
Surface miners hard at work For personal use only
Slide 33: Trucks loading fast
For personal use only Trucks loading fast
Slide 34: World's largest radial stacker at work
World’s largest radial stacker at work For personal use only
Slide 35: Mine: 24/7
For personal use only Mine: 24/7
Slide 36: Integrated Crushing & Screening Plant
Integrated Crushing & Screening Plant For personal use only
Slide 37: Train Loader in operation
Train Loader in operation For personal use only
Slide 38: Fortescue has a proven rail operations team
Fortescue has a proven rail operations team For personal use only From Concept To Reality Fortescue Rail Site - 2007 Fortescue Rail Site - 2008
Slide 39: Rolling stock have exceeded expectations
Rolling stock (particularly wagons) have exceeded expectations For personal use only
Slide 40: Train unloader from Rail to Port - fully operational
Train unloader from Rail to Port - fully operational For personal use only
Slide 41: Port and loading systems
Port and loading systems For personal use only From Concept To Reality Fortescue Port Site - 2006 Fortescue Herb Elliott Port - 2008
Slide 42: A massive footprint - inbuilt expansion capacity
A massive footprint - inbuilt expansion capacity For personal use only
Slide 43: Stacker & Reclaimer - fully operational
Stacker & Reclaimer - fully operational For personal use only
Slide 44: Port: 24/7
For personal use only Port: 24/7
Slide 45: Mtpa expansion map
160 mtpa expansion map For personal use only Port Hedland Point Samson Dampier LEGEND FMG Tenements Ore Processing Plant Glacier Valley Valley FMG Rail Other Rail FMG Rail Extension FMG Kennedy Rail Flinders Flinders Solomon White White Knight Knight Cloud Break Break Eliwana Eliwana Christmas Chris
Slide 46: 160+ Mtpa Anderson Point
160+ Mtpa Anderson Point For personal use only 5 x Cape size 3 x Rail Loop 3 x Train Unloader 160+ Mtpa stock yard expandable to 200+mtpa
Slide 47: Australia-China Iron Ore Trade
Australia-China Iron Ore Trade For personal use only • Australia is the most reliable, lowest sovereign risk, highest value-in-use supplier of critical raw materials to the growth markets of Asia, especially China. • FMG is the best ‘win/win’ supply option for the Chinese Steel Industry
Slide 48: Support for the Chinese Steel Industry
For personal use only FMG wishes to express our sincere support for the Chinese Steel Industry in these difficult times. We believe we will successfully work through this together.
Slide 49: Register for email alerts
For personal use only For regular email alerts register online at www.fmgl.com.au
Fortescue Metals Group — 8th China International Steel & Raw Materials Conference 2008 on 6ix