Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Investor Presentation (February 2004)
10 slides from Fortescue's investor presentation, February 2004
Slide 1: The Market
THE MARKET “Old beliefs do not lead you to new cheese” Dr Spencer Johnson - Who moved My Cheese? 1
Slide 2: Steel Demand - Growth!
STEEL DEMAND - GROWTH! Steel Consumption and GDP/Capita 900 - Ll P ra Korea D 700 + ee ° ° 600 | a a, © o “ase m,°*%° bd wv e 400 - Japan Usage kg/capita 10000 20000 30000 40000 GDP capital (constant 1995$US) Source: IISI, World Bank, uses crude steel basis
Slide 3: Ore Demand Outpacing Supply
ORE DEMAND OUTPACING SUPPLY Current supply chain incapable of meeting demand growth Existing “best case” seaborne capacity forecast to increase to 620 mtpa from 480 mtpa by 2007 World seaborne iron ore consumption to increase 480 to 700 mtpa by 2007 80 mtpa is needed, to contributed to by FM
Slide 4: Crude Steel Production (CSP - in China)
Crude Steel Production (CSP - in China) “Beware of Producer Predictions” ÂIn the late 1990’s experts predicted CSP reaching 150 Mt by 2005 ÂThis figure was exceeded in 2000. China became the world’s largest steel maker in 2001 - four years ahead of predictions! “The surge in crude steel demand, whic
Slide 5: China's Economic Growth
China’s Economic Growth Minister of Commerce stated this year that China will quadruple its 2000 GDP by 2020 ÂThis implies > 7% annual growth rate ÂChina’s iron ore import growth usually > 10%, exceeds GDP growth ÂIf imports continue to grow at 10% annually, imports will exceed 500 Mt by 2010! 5
Slide 6: Future iron ore supply, unreliable
Future iron ore supply, unreliable Supplier Constraint Fragmented low quality mines China High energy cost Environmental concerns Bureaucratic limitations India* Poor logistic economics South American growing internal iron ore Brazil* demand Significant freight cost disadvantage to Asia * Have large
Slide 7: Iron Ore Shipments - Australian % lost market share
Iron Ore Shipments - Australian % lost market share % Increase since 1990 Source: DoIR/JP Morgan 7
Slide 8: Chinese imports of iron ore by Country, showing effect of the Pilbara bottleneck
Chinese imports of iron ore by Country, showing effect of the Pilbara bottleneck 50 45 40 35 30 Australia 25 Brazil 20 India 15 South Africa 10 5 0 1998 1999 2000 2001 2002 2003 Source: GSJBWere 8
Slide 9: The Pilbara, the lowest supply costs
The Pilbara, the lowest supply costs Cost difference of US$8.00 to $10.00 in additional shipping cost per tonne from Brazil (CVRD) to growth markets 9
Slide 10: Competition for Ore
Million Tonnes 0 2 4 6 8 10 12 1978 1979 1980 1981 1982 1983 1984 1985 Source: DOIR 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 TAIWAN 1999 2000 2001 Million Tonnes 10 15 20 25 0 5 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Competition f
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