Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Investor Presentation (December 2014)
31 slides from Fortescue's investor presentation, Dec 2, 2014
Slide 1: Corporate Presentation
Corporate Presentation For personal use only December 2014
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Limited ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This prese
Slide 3: Building a world class company
Building a world class company Reliable and competitive supplier to Asia For personal use only • First ore 2008 • Over 415mt shipped to date • 155mtpa++ production rate • Low cost producer • Unique culture 3
Slide 4: For personal use only
For personal use only 4
Slide 5: The safest, lowest cost, most profitable iron ore producer
at O J R V/ I S I @ The safest, lowest cost, Fortescue most profitable iron ore producer Our Values | Safety Family oxAVIOy, . ty Frugality Empowerment A x ¢ 3 an 9 . oo Integrity Dy) Fortescue © Enthusiasm Generating ideas Determination Set yourself stretch targets
Slide 6: Safety is at the heart of Fortescue's family values
Safety is at the heart of Fortescue’s family values “My brothers’ / sisters’ keeper” For personal use only • Safety Priorities 1. Look after yourself 2. Look after your mates • Engagement active participation • Empowerment to make decisions • Encouragement to speak up • Leadership strong and visible
Slide 7: Annual performance
Annual performance Record operational performance delivers NPAT of US$2.7bn and EBITDA* of US$5.6bn For personal use only Volume 54% Costs 23% 140.0 50 US$/wmt 105.0 40 mt 70.0 30 35.0 - 20 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 Earnings EBITDA 58% NPAT 57% Debt repaid US$3.6bn 6.0 14.0 U
Slide 8: Operating performance
Operating performance Cost and efficiency focus For personal use only 14.4mt Oct $US3.6bn 7% Sept Qtr debt reduction 172 mtpa Annualised run rate October production 14.4mt Sweating the assets US$2.0bn Costs $29/t cash on hand in October 2014 8
Slide 9: Costs reduction journey
Costs reduction journey Focus on efficiencies and costs improvements For personal use only 100 9 80 14 60 21 6 6 5 4 2 18 3 $46 all in cost per wmt 40 13 $41 CFR delivered cost 48 12 to customers 34 32 29 C1 – mining, processing, 20 rail and port costs June 12 June 14 Q1 FY14 Oct 14 C1 cost Shipping
Slide 10: US$3.6bn re-paid since November 2013
US$3.6bn re-paid since November 2013 Flexibility with $5.3bn available for voluntary repayment and $7.8bn by Nov 2015 For personal use only 5,000 Pre-payable at Fortescue's option 4,500 4,900 4,000 3,500 3,000 Pre-payable at US$m 2,500 Fortescue's Pre-payable at option 2,000 Fortescue's in April 201
Slide 11: Capital expenditure
Capital expenditure Significant reduction in expenditure as expansion complete For personal use only Capital profile FY15 Capital US$bn 7.5 Exploration 6.0 40 4.5 250 Operational capital 3.0 360 1.5 Development and optimisation 0.0 projects* FY10 FY11 FY12 FY13 FY14 FY15(est) • FY15 capital guidance
Slide 12: Development
For personal use only Development
Slide 13: AP5 and Iron Bridge Projects
AP5 and Iron Bridge Projects Remain on schedule for March 2015 For personal use only 13
Slide 14: Significant reliance on diesel fuel
Significant reliance on diesel fuel Driven by mobile fleet and remote power consumption For personal use only Total energy spend >US$800 million * Diesel (Mine Fleet) Diesel Diesel (Rail) (Electricity) Diesel Gas (Port) (Ancillary) 14 * Based on annual output of 155mtpa
Slide 15: Fortescue River Gas Pipeline
Fortescue River Gas Pipeline Stage 1 to Solomon Hub For personal use only 270km gas pipeline 15
Slide 16: Autonomous Haulage Solution (AHS)
Autonomous Haulage Solution (AHS) Trials commenced FY13 For personal use only 20 trucks operating at Kings 35mt Ore hauled to date Improving 10-20% operational efficiencies safety 16
Slide 17: Mine lives based on current reserves
Mine lives based on current reserves Fortescue mine lives compare favourably For personal use only Reserve and Resource Tonnages bn (dry) Ore Reserve Life (Years) 25 25 20 20 15 15 10 10 5 5 0 0 Fortescue BHPBIO RTIO Fortescue BHPBIO RTIO Reserves M&I Resources Total Resources Based on last 12 month
Slide 18: Market
For personal use only Market
Slide 19: China's growth remains strong
China’s growth remains strong Long term fundamentals remain positive For personal use only • China’s urbanisation continues • Pro-business structural reform • China’s GDP 2014 target remains ~ 7.5% with low inflation 19
Slide 20: Demand for seaborne supply
Demand for seaborne supply New coastal capacity moving away from domestic iron ore For personal use only Iron Ore Reserves New/proposed steel capacity Seaborne iron ore Seaborne iron ore imports (Ex. Australia, Brazil etc.) 20 Source: ANZ Research
Slide 21: Supporting our local community
Supporting our local community For personal use only
Slide 22: Building our economy
Building our economy Unlocking the potential of WA’s North West For personal use only 15,000 employed AU$800m* wages p.a. AU$2.1bn taxes and royalties p.a. AU$490m localised spend FY14 22 * applies to full time employee wages only
Slide 23: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara Creating opportunities through training, employment and business opportunity For personal use only 1,100 Aboriginal employees Aboriginal people in 12% Fortescue workforce Contracts to Aboriginal $1.7bn companies and JV’s VTEC Roebourne, Training Centres Sou
Slide 24: Clear strategy
For personal use only 24 Clear strategy
Slide 25: Moving down the global cost curve
Moving down the global cost curve Targeting bottom quartile For personal use only China Iron Ore Supply CFR Costs – Oct 2014 (including royalties and freight) 200 Domestic Chinese Ore Australia Brazil India 150 South Africa Other US$/dry tonne 100 50 Fortescue 0 0 100 200 300 400 500 600 700 800 900
Slide 26: Port – flexible design for future growth
Port – flexible design for future growth Fifth berth under construction For personal use only AP3 AP2 AP1 AP4 AP5 2015 26
Slide 27: Fortescue's Chinese iron ore import market share is reaching 16%
Fortescue’s Chinese iron ore import market share is reaching 16% Target product strategy to deliver 155 to 160mtpa – average grade 58% For personal use only Bonnie Fines 6mtpa Super Special Fines 30mtpa Fortescue Blend Rocket 70mtpa 10mtpa Kings CID 40mtpa 27
Slide 28: The Fortescue Journey
The Fortescue Journey For personal use only
Slide 29: The New Force in Iron Ore
The New Force in Iron Ore … For personal use only • Low cost producer 155mtpa++ • Fast capital efficient delivery • World class hardware and “software” • Unique culture drives performance • Never Ever Give Up 29
Slide 30: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting: Proudly supporting:
Slide 31: Glossary
Glossary Definition of non-IFRS terms For personal use only NPAT = net profit after income tax Reconciliation of EBITDA to IFRS items 2014 2013 EBITDA = profit before income tax adjusted for depreciation and US$m US$m amortisation, asset write offs, exploration, development and other write-offs, net
Fortescue Metals Group — Investor Presentation (December 2014) on 6ix