Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Sydney Mining Club, November 12, 2009
77 slides from Fortescue's conference presentation, Nov 12, 2009
Slide 1: Innovation powers multi-mine, multi-hub Force
For personal use only Innovation powers multi-mine, multi-hub Force Presentation to Sydney Mining Club, November 12, 2009
Slide 2: Disclaimer - Important Notice
Fortescue Metals Group 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 pre
Slide 3: Overview
For personal use only Overview
Slide 4: Last quarterly – key points
Last quarterly – key points For personal use only • Record quarterly shipments of 9.526 million tonnes • Larger more efficient Surface Miner introduced • Efficiencies increasing with continued cost focus • Strong cash position of US$704 million • Second processing plant commitment optimises Chichest
Slide 5: Low cost operation – >42mt shipped
Low cost operation – >42mt shipped For personal use only
Slide 6: Innovation: fast, reliable ramp up
Innovation: fast, reliable ramp up For personal use only 50,000 45,000 FMG Cloudbreak Annual Production (kt) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 RIO Hope Downs RIO IOC (pellets and concentrate) RIO Robe River RIO Channar
Slide 7: Summary - 55mtpa run rate and growing
Summary - 55mtpa run rate and growing For personal use only • 18 months of highly efficient ramp up • On track for 55mtpa run rate by end 2010 • 95mtpa from Chichester Hub advancing • Solomon Hub under fast-track management, initially 60mtpa, then expanding • Infrastructure planned to 155mtpa • Stro
Slide 8: Technical innovation drove success
Technical innovation drove success For personal use only • A new exploration model – microplaty hematite and supergene ores below cover • A new mining production method – surface miners • Overburden removal – New fully automated single handle conveyor overburden removal system • 40 tonne axle loads
Slide 9: Innovation drove success
Innovation drove success For personal use only • A new product – ‘Rocket Fines’ • Innovation – Design of the flowsheet reduced footprint size but significantly increased capacity • Low capex / tonne – Compared to the last major wet plant built in the Pilbara, the Desand Plant is half the price – and
Slide 10: World class asset operating low on the cost curve
World class asset operating low on the cost curve For personal use only Iron Ore Cash Costs for 2009 - Saleable Mine and Pellet by Company 90 Port Costs 80 Royalties US$/dry tonne in real terms Transport LKAB: Pellets Pelletizing 70 Processing Fortescue Metals: Lumps, Fines Mining BHP Billiton: Lump
Slide 11: Chichester and Solomon ore bodies
Chichester and Solomon ore bodies For personal use only Investigator Firetail Solomon East Serenity Cloudbreak Christmas Creek
Slide 12: Chichester Hub
For personal use only Hub 1 Chichester
Slide 13: Chichester – forging on to Solomon 95mtpa Hub
Port Hedland For personal use only Bedded Iron Deposits Channel Iron Deposits Chichester – forging on to Solomon 95mtpa Hub Chichester Hub
Slide 14: Chichester hub – current status
Chichester hub – current status Optimising Cloudbreak operations For personal use only • Record quarterly shipments of 9.526 million tonnes • Efficiencies increasing with continued cost focus – US$26.60 / ton • Focus on safety and organisational foundations Ore mined Ore processed Ore shipped Mt (we
Slide 15: Predictable ramp up growth
Predictable ramp up growth For personal use only Q3FY10 target 42 mtpa Current 38 mtpa
Slide 16: Pit operations
Pit operations Employing techniques matched to our ore body characteristics For personal use only Overburden trucks Excavator Surface miner OVERBURDEN Ore trucks ORE BODY
Slide 17: Innovation: Surface mining operations then
Innovation: Surface mining operations then For personal use only
Slide 18: Innovation: Surface mining operations now
Innovation: Surface mining operations now For personal use only
Slide 19: Innovation: Overburden removal
Innovation: Overburden removal Development of leading solutions to dramatically reduce cost For personal use only
Slide 20: Innovation: Pilbara’s largest ore processing plant
Innovation: Pilbara’s largest ore processing plant For personal use only
Slide 21: OPF average daily production – rising
OPF average daily production – rising For personal use only 120,000 100,000 80,000 Tonnes 60,000 per day 40,000 20,000 0 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10
Slide 22: Train load out – highly efficient
Train load out – highly efficient For personal use only • Surge capacity 360,000 tonnes • 2 bins x 400 tonne capacity • Feed rate to bin 14,000 tonnes per hour • Load rate 12,000 tonnes per hour • Capability 9 – 10 trains/day
Slide 23: Chichester optimisation (short term) to 55mtpa
Chichester optimisation (short term) to 55mtpa For personal use only 50 km rail spur Haul 16 Rail 39 RoM tonnes Christmas Creek Cloudbreak dry Port 55 wet de-sand de-sand plant plant Product tonnes 34 8 19 Construct second plant at Christmas Creek Christmas Creek Cloudbreak mine mine Ramp up Christm
Slide 24: Christmas Creek on the move
Christmas Creek on the move For personal use only October 2009
Slide 25: Christmas Creek operations
Christmas Creek operations For personal use only • Currently producing 6Mtpa from Eyre pit. • Operation established without a lost time injury. • Wholly established as a small operation to supplement Cloudbreak with low Alumina, higher Phos blend. • Cloudbreak no longer requires this feed so the ope
Slide 26: Christmas Creek operations
Christmas Creek operations For personal use only • Approval received to expand operation to build 19Mtpa ore processing facility at Christmas Creek • An initial capacity of 16Mtpa of product and 8Mtpa haul to Cloudbreak. • This equates to 27Mtpa ROM feed, we have assumed 30Mtpa. • Initial 11Mtpa opt
Slide 27: Christmas Creek operations
Christmas Creek operations For personal use only • Competition between Christmas Creek and Cloudbreak drives lowest cost basis across both operations. • EOI issued for big picture mining contract • Rates based with incremental haulage pricing mechanisms to allow for flexibility of operations. • Our
Slide 28: Chichester 55mtpa to 95mtpa Ramp Up
For personal use only Chichester 55mtpa to 95mtpa Ramp Up
Slide 29: Chichester hub – growth pathway to 95mtpa
Chichester hub – growth pathway to 95mtpa Expansion 55 to 95 mtpa For personal use only Ramp up 35 to 55 mtpa • Expansion of port and mainline rail infrastructure Start up to 35 mtpa • Cost and efficiency focus • Construction of second plant at Christmas Creek • Fleet expansion, introduction • Furth
Slide 30: Solomon Hub
For personal use only Hub 2 Solomon
Slide 31: Solomon – the only multiple ore type hub
Port Hedland For personal use only Dampier Solomon Hub Solomon – Chichester Hub the only multiple ore type hub Tom Price Paraburdoo Newman
Slide 32: Solomon – the next generation
Solomon – the next generation • Targeting 4 billion tonnes of resource For personal use only • Firetail and other Brockman targets should deliver >300mt of DSO product • Brockman is dry and has a strip ratio of less than 2:1
Slide 33: Solomon – the next generation
Solomon – the next generation • CID deposits will deliver 600mt of DSO product For personal use only • CID requires modest moisture management with a strip ratio of <3:1 • Planning for production of 30mtpa of Brockman, expanding to 50mtpa with further exploration • Planning for production of 30mtpa
Slide 34: Solomon – tier one mining hub
Solomon – tier one mining hub For personal use only Mining Centre Bedded Iron Channel Iron Resource / Production Deposits Deposits Reserve (Mt) Current/ Target (Mtpa) Fortescue Chichester Hub 2,227 38 / 95 Solomon Hub 1,366 2,223 - / 60 /100 Rio Tinto Tom Price 1,030 Paraburdoo / Channar 359 Brockma
Slide 35: Solomon – world class iron ore production hub
Solomon – world class iron ore production hub For personal use only
Slide 36: Solomon – Firetail (Brockman) Project
Solomon – Firetail (Brockman) Project • Firetail north (including Joffre) and Firetail south all within close proximity For personal use only FIRETAIL Additional BID targets in region from drilling of mapped mineralisation
Slide 37: Solomon – Valley of the Kings (CID) Project
Solomon – Valley of the Kings (CID) Project • More than 30 km strike length of CID in valleys For personal use only • Additional tonnages to be gained by exploring other valleys and infill areas VALLEY OF THE KINGS
Slide 38: Solomon expansion Capex / Opex
Solomon expansion Capex / Opex Decision to mine in 2010 / 2011 For personal use only • Additional product stream of up to 60mtpa to Port Hedland • Growing to 110mtpa on further expansions • Further expansion planned beyond 60mtpa at (new) Pilbara Port at Anketell Point (not Port Hedland) Item Capex
Slide 39: Infrastructure – Quality that leads industry
Infrastructure For personal use only Quality that leads industry
Slide 40: FMG runs off world’s best infrastructure
FMG runs off world’s best infrastructure For personal use only Port Hedland World’s leading port and Bedded Iron Deposits rail, linking two Channel Iron Deposits hubs Solomon Hub Chichester Hub
Slide 41: Rail Site – rapid development, January 2007
Rail Site – rapid development January 2007 For personal use only
Slide 42: Rail Site – rapid development, February 2008
Rail Site – rapid development February 2008 For personal use only
Slide 43: Proven skills in construction and operations
Proven skills in construction and operations For personal use only From concept To reality Herb Elliott Port Port 2006 2008 Fortescue Railway Rail 2007 2008 Cloudbreak Mine Minesite 2006 2008 FACT: Fortescue built its infrastructure faster than any other mining company FACT: Fortescue ramped up prod
Slide 44: Rail Highlights
Rail Highlights For personal use only • Trains started running on 5 April 2008 • 1,650 trains delivering over 42 million tonnes to date • Driver only operations – 240 car trains • Train control in Perth 1,600 km away • 4 x 240 car train sets (55 mtpa) • Cycle time <20 hours 300km of track, 20,000 to
Slide 45: Train loading speed – accelerating
Train loading speed – accelerating For personal use only 140 120 100 Seconds per 80 dual wagon pair 60 40 20 0 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10
Slide 46: World’s most efficient rolling stock, ballast and fuel cars
World’s most efficient rolling stock, ballast and fuel cars For personal use only
Slide 47: State of the art rail operations
State of the art rail operations Target - Lowest cost transport in the Pilbara For personal use only Rail • Clean sheet design takes existing technology to the next step: – Bigger carrying capacity – Electronic braking system – Aerodynamics • 40 tonne axle loads • Low centre of gravity, long wheel b
Slide 48: Ore cars (manufactured in China) – top quality
Ore cars (manufactured in China) – top quality For personal use only The world’s heaviest haul ore cars
Slide 49: Locomotives (manufactured by GE)
Locomotives (manufactured by GE) 15 x 44CW GE Dash – 9 (4,400HP) For personal use only
Slide 50: Higher axle loads mean greater productivity and lower running costs
Higher axle loads mean greater productivity and lower running costs For personal use only Axle loads (t) Trains/day to achieve 55mtpa* Fortescue (2010) 40 Fortescue (2010) 4.6 Fortescue 38 Fortescue 4.9 BHP 37.5 BHP 5.0 Rio 35.7 Rio 5.3 Vale 31.5 Vale 6.2 China 28 China 7.2 South Africa 28 South Afr
Slide 51: Train unloading speeds – accelerating
Train unloading speeds – accelerating For personal use only 200 180 160 140 120 Seconds per dual wagon 100 pair 80 60 40 20 0 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10
Slide 52: World wide recognition
World wide recognition For personal use only International rail journal • Cover of world’s No. 1 industry journal • Noted Fortescue’s ingenuity in constructing and operating the world’s heaviest haul railway • Key design objectives to challenge the dominance of industry heavy weights
Slide 53: From rail to port – the train unloader
From rail to port – the train unloader For personal use only • 2 x Cell Rotary Dumper • Train unloaded 1 x rake • 2 x cars every 90 seconds • 2.6 hours/train • 11,000 tonnes per hour
Slide 54: Train unloader, stacker, reclaimer, ship loader
For personal use only TRAIN UNLOADER STACKER RECLAIMER SHIP LOADER
Slide 55: Two berth operation at Herb Elliott Port
Two berth operation at Herb Elliott Port Target - Lowest cost transport in the Pilbara For personal use only Port • Significant expansion area • Highly automated • Extensive use of conveyors • Largest shiploader in Australia
Slide 56: Two berth operation at Herb Elliott Port
Two berth operation at Herb Elliott Port For personal use only Ship 2 – high in the Ship 1 – water, wait nearly ing for loaded loading and low in the water
Slide 57: Herb Elliott Port Facility
Herb Elliott Port Facility For personal use only • Rapidly executing construction and operations • Port Construction commenced February 2006 • First train tipped 6th April 08 • Unloading rates achieving nameplate capacity
Slide 58: Herb Elliott Port Facility
Herb Elliott Port Facility For personal use only • Highly automated process – central control position • Only 2 manned positions in entire Port facility • Continuous loading from 2 berths – minimal changeover time • Stockyard expansion will have minimal impact on operations • Wharf extension modular
Slide 59: Herb Elliott Port Facility
Herb Elliott Port Facility For personal use only • Exported more than 42Mt to date • Facility record of 7337 GLR one cape size in one day • Tonnes per FTE at Port Operations is currently more than 460,000 per person • The best in the Pilbara Iron Ore Ports • Highest capacity equipment in Australian
Slide 60: Shiploading rates – accelerating
Shiploading rates – accelerating For personal use only 7,000 6,000 5,000 4,000 Tonnes per hour 3,000 (GLR) 2,000 1,000 0 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10
Slide 61: Current port infrastructure
Current port infrastructure For personal use only 2 Berths 1 Shiploader 2 Stackers 1 Reclaimer 1 Train Unloader
Slide 62: Port infrastructure, 55, 95, 155mtpa
Port infrastructure, 55, 95, 155mtpa For personal use only Capacity (mtpa) 55 95 155 Berths 2 3 5 Shiploaders 1 2 3 Capacity (mtpa) 55 95 155 Stackers 2 2 4 Reclaimers 1 2 3 Capacity (mtpa) 55 95 155 Train Unloaders 1 2 3 5th berth at South West Creek awaiting approval by Port Authority
Slide 63: 155Mtpa Anderson Point
155Mtpa Anderson Point For personal use only • 5 x Cape size • 3 x Rail Loop • 3 x Train Unloader • 155 Mtpa stock yard expandable to 200+mtpa
Slide 64: FMG Ores
FMG Ores For personal use only Asia’s highest growth steel making product
Slide 65: Rocket Fines
Rocket Fines For personal use only Why is it so competitive: • Competitive with Brazil and other Australian fines - 64.6% Fe calcined • Low in contaminants - (4.4% SiO2, 1.9% Al2O3 and 0.054% P) • Ideal for China - Coarse size and low ultrafines content • Strong sintering properties – fast sintering
Slide 66: Steel mills love coarse fines – they sinter fast
For personal use only % Passing 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Yandi - BHPBIO FMG Rocket Yandi - Rio Tinto Newman - BHPBIO Carajs - Vale 1 Indian SFSC - Vale Fine Ore Product MAC - BHPBIO Fine Ore Size - % <1.0 mm CJF - Vale Pilbara Blend - Rio Tinto PFCJ - Vale St
Slide 67: Strong product acceptance
For personal use only Strong product acceptance • High calcined iron • Mills can use up to 50%, vs15% • Low in contaminants max for MAC, 35% Pilbara Blend • Coarse size with low ultrafines • Less sensitive to over-melting • Very fast sintering speed/high compared to Yandi production rate (“Fires lik
Slide 68: Rocket Fines has high calcined Fe
Rocket Fines has high (>64%) calcined Fe once crystal water is removed during sintering For personal use only Calcined Fine Iron Ores Iron 70.0 69.0 68.0 67.0 66.0 <2.6% Fe difference 65.0 HG Brazilian - Southern 64.0 % Fe 63.0 FMG - Rocket Fines LG Indian Fines 62.0 HG Indian Fines HG Brazilian 61.
Slide 69: Very high percentage use per customer
Very high percentage use per customer For personal use only Rocket Fines Usage at Customer Steel Mills 30% 25% % of Fortescue Custom ers 20% 15% 10% 5% 0% 0-10 10-20 20-30 30-40 40-50 50 - 80 >80 % Rocket Fines Used in Customer Sinter Blend (Ore Basis) Most mills using Rocket Fines at 30-45% of thei
Slide 70: Iron ore for generations
For personal use only Iron ore for generations
Slide 71: Fortescue has a dominant Pilbara land position
Fortescue has a dominant Pilbara land position For personal use only FMG: 71,400 km2 Rio: 11,000 km2 (Robe 4,200 km2) BHP: 6,500 km2 71
Slide 72: Exploration
Exploration 6.3 billion tonnes in 5 years For personal use only • Christmas Creek drilling commenced May 2004; • Cloudbreak commenced November 2004; • Solomon drilling commenced June 2007. • Reserves now1.6 billion tonnes • Resources now 5.1 billion tonnes • Additional 1.2 billion tonnes of magnetit
Slide 73: Project pipeline underpinned by geology
Project pipeline underpinned by geology • The largest bedrock hosted iron ore discovery in Australia For personal use only • New exploration Chichester 3500 Robe resource Robe reserve HI reserve 3000 FMG resource HI resource 2500 million tonnes FMG reserve BHPB reserve 2000 Hancock BHPB resource Oth
Slide 74: FMG Pilbara resources and targets
FMG Pilbara resources and targets to underpin the project pipeline For personal use only Current Current Further TOTAL Area Resources Targets Potential Chichester Hub 2.81 1.8 1.3 6.0 Solomon Hub 2.27 1.1 1.5 4.9 Jeerinah Anticline 1.5 1.1 2.6 Western CID 1.0 1.0 2.0 Southern Pilbara 0.4 0.8 1.2 Eas
Slide 75: Expansion risk considerations
Expansion risk considerations For personal use only Risk Mitigant • Proven management expertise and capability across all Execution areas to implement expansion • Massive JORC resource base of 6 billion tonnes Resource • Underpin planned production for in the order of 30 years and beyond with furthe
Slide 76: Port expansion beyond 155mtpa
Port Pilbara Hedland Port For personal use only Expansion beyond 155mtpa? Will rely on 2nd Port at Anketell Point, the Pilbara Port Solomon Hub Chichester Hub
Slide 77: Australia’s own emerging resource major
For personal use only Australia’s own emerging resource major www.fmgl.com.au For regular email alerts register online
Fortescue Metals Group — Sydney Mining Club, November 12, 2009 on 6ix