Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — WAAPA Biennial Conference 2007
45 slides from Fortescue's conference presentation, Jul 2, 2007
Slide 1: Lodgement of Presentation
Fortescue Metals Group Ltd Telephone: + 61 8 6248 6828 ACN: 002 594 872 Facsimiie: +61 8 6218 8880 87 Adelaide Terrace East Perth Website: www.fmgi.com.au Western Australia 6004 PO Box 6915, East Perth, Western Australia 6892 2° July 2007 The Companies Officer Australian Stock Exchange Ltd Exchange
Slide 2: The New Force in Iron Ore
Fortescue Metals Group Ltd THE NEW FORCE IN IRON ORE Port. Hedian j, 27 — 29 June 2007
Slide 3: Disclaimer
Fortescue Metals Group Ltd DISCLAIMER 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
Slide 4: Driving China's Exponential Demand for Iron Ore: Urbanisation
& “. isations” — Driving China’s Exponential Demand for Iron ore Urbanisation * Currently 44% (circa 580m people) live in urban areas « Increasing by approximately 1% pa (10 -15m people) + Independent of economic cycles Urbanisation is a juggernaut — unaffected by economic cycles
Slide 5: Urbanisation is the biggest driver of iron ore demand
& “. isations” — Driving China’s Exponential Demand for Iron ore ¥ Urbanisation + Urban construction running behind migration « In excess of 100m people * Currently around 60% of steel goes into construction + Residential construction is the biggest driver Urbanisation is the biggest driver of iron
Slide 6: Industrialisation
& “. isations” — Driving China’s Exponential Demand for Iron ore Industrialisation Pools of people able and willing to work for low wages Rapidly growing internal market High saving rate underpinning investment Industrial output 3° globally and growing > 10% pa World’s Factory Urbanisation is facili
Slide 7: Globalisation
& “. isations” — Driving China’s Exponential Demand for Iron ore Globalisation + Reduced barriers to international trade + Investment and capital flows mobile « China attractive location with undervalued exchange rate + World’s factory (Urbanisation) x (Industrialisation) x (Globalisation) = Ultra-f
Slide 8: Ultra-fast Development = New Risks
& Ultra-fast Development = New Risks ¥ + Underestimating Demand Again — expansion plans risk being too little too late — “isations” = more demand sooner — more than “compound growth” — “logistic growth” — 120Mt higher by 2011 Rearview mirror forecasting doesn’t see the changes coming
Slide 9: China Needs Iron Ore Now
; China Needs Iron Ore Now Chinese Iron Ore Imports === History eee Exponential Logistic Million tonnes
Slide 10: China Requires that Australia Recover Market Share
< China Requires that Australia Recover Market Share Chinese Imports by Source ¥ 80.00% 70.00% 60.00% 50.00% oe Aust =—_——— Brazil 40.00% india omen S Africa 30.00% == Others 20.00% 10.00% 0.00% 29 OO A Dd PO om © © KN © PO OKA D1 Oe © OC A PPP PPK LK KF LK HPP KES LS Source: Tex Report; FMG
Slide 11: China needs the Pilbara
& China needs the Pilbara * + Australia is the most competitive supplier to Asia Australian Ore US$56.90 * Three companies globally set price and South African Ore US$65.20 dominate the seaborne market Brazilian Ore US$72.10 + Fortescue plans to be the 4'" major seaborne Indian Ore US$64.60 suppl ie
Slide 12: Infrastructure Constraints
& Infrastructure Constraints Access to infrastructure essential for smaller producer + No access = no nimble competitors Major producers misread the market * Mistook structural change as merely cyclical waves — not a tsunami Absence of latent capacity + Effective capital management? or + Avoidance o
Slide 13: Fortescue will meet the challenge
& Fortescue will meet the challenge ¥ Open Access Infrastructure * built to support Chichester Range Project * encourage smaller producers Aggressive expansion plans + 45 to 60Mtpa (incl 5Mtpa for 3°¢ parties) + 55 to 100Mtpa commences 2009 * 100 to 150/180/200Mtpa * as much as possible as soon as p
Slide 14: Massive Pilbara holdings
Massive Pilbara holdings ad ” Port Hedlen Blount hiaonty LEGEND Be) ere Existing raiheays idsworthy| ate PMG mabey under eonstrachan FMG sontralled tenure [4 EMS Chichester Ranges project avea FMG iron ore project te Iron Ore ming be eimes Creel BHP Votiii i Aye vi oy fining — Hepelp owns, te = : We
Slide 15: Latest Project Highlights
Latest Project Highlights ¥ * Project completion forecast within allocated funding. ¢ First Ore On Ship (FOOS) expected mid May 2008. * Port dredging ahead of schedule, marine structure piling advanced. TA Se Lemna
Slide 16: Unparalleled Port Assets
y i Critical Path C ontract | Dredging Completed 11 May 2007 2 Unparalleled Port Assets Port Hedland, Western Australia’s iron ore coast Ue Le a oy ae oo i ae a
Slide 17: Close-up of Fortescue's wharf construction
Slide 18: BHPB ship enjoying the dredged turning circle
Slide 19: Train Unloader on Schedule
Train Unioader on Schedule
Slide 20: Rail Corridor
Rail Corridor yy Le a. oo lo yo oo | LN i ; oo : in oe Lo ee a ae ae Rail earthworks on four. separate construction fronts and all bridges underway
Slide 21: East Turner River Bridge Concrete Piers
& , East Turner River Bridge Concrete Piers
Slide 22: Locos on the way
Locos on the way ga ee A / 7 a) fig Ce
Slide 23: Permanent Camp - Cloud Break Mine
Permanent Camp — Cloud Break Mine
Slide 24: ca iii aa
ae o-, | no ee ca iii aa ‘an
Slide 25: First crusher going to Site
First crusher of 8 going to Site i y i A : Len: ) ' oy ng ie ion a ee Ue IN
Slide 26: First of vibrating screens on way to Site
First of 11 vibrating screens on way to Site
Slide 27: Marketing - Sold out
i Marketing — Sold out « Allfirst phase 45Mtpa contracted for minimum of 10 years « Approximately 50Mtpa contracted for “Fortescue Expansion” tonnage + All “top 10’ Chinese Mills have agreements « The focus has been on agreements directly with mills who have approval to expand and already receive su
Slide 28: FMG and Baosteel
Oc FMG and (G) BAOSTEEL + Off-take agreement — up to 20 mtpa for 10 years. + 745 —sold out — 100% contracted, with 5mtpa to Baosteel. « Underwrites future expansion beyond T45. + Major product endorsement for other global steel mills. * Technical program to optimise Fortescue ore for market. + Prefe
Slide 29: Offtake Growth target: >100mtpa
& , Offtake Growth target: >100mtpa @CLOLD BREAK @TEXTURE X/CC OCHRISTMAS CREEK OMT LEEUWIN @ WHITE KNIGHT @FLINDERS SOLOMON Targe
Slide 30: Project Schedule
Project Schedule & ” The project is on schedule for first ore on ship in May 2008
Slide 31: Expansion program is being driven by demand
& Expansion program is being driven by demand. - All first phase 45mtpa contracted for 10 years + + Further 50mtpa contracted for expansion tonnage + Baosteel, Tangshan and several others FMG’s China Headquarters in Shanghai
Slide 32: Port Expansion
& Port Expansion to 100 mtpa + Will require expansion of port footprint + No increase in SRL lease area + Possible increase in conveyor licence area over BHPB line at port. « Environmental approval for increased dredging underway
Slide 33: Port Expansion
cc Port Expansion to 200 mtpa ¥ «Expansion above 100mtpa will require significant expansion of port facilities « Confident that this expansion is possible at port.
Slide 34: Railway expansion - Kennedy Line
; Railway expansion — Kennedy Line ¥ + Rail route to service FMG tenements with outstanding resource potential * $91 LAA Investigation licence has been applied for + Finalising Native Title agreements + Investigating environmental approvals Port Hedland Point Samson 2 Dampler.!/ axe ¥ - fry ee
Slide 35: Government support
OE Government support + Review of Agreement Act to ensure it operates efficiently + Issue of Investigation Licence for Kennedy Line + Fast track port capacity studies
Slide 36: Accommodation
& Accommodation « Working with Department of Housing « 225 lots in South Hedland to complement the 25 at Pretty Pool. « Release of land by LandCorp near the hospital that will provide the potential for more lots for Fortescue. + Working with development and design consultants to provide high quality
Slide 37: Expansion Plan
EXPANSION PLAN — 200 mtpa ¥ * Mineralisation Definition — Anticipated mineralisation in Chichesters (Eastem Pilbara) 3.3 Bt. — Anticipated mineralisation in Central Pilbara > 1 Bt. * Expansion Target for Port Hedland is 200 mtpa — Port capacity for FMG, Cape and Panamax size vessels — Maximises port
Slide 38: Targeted Mineralisation, all categories
Targeted Mineralisation, all categories CHICHESTER RANGE Targeted, Mt - Cloud Break ~ 1000 - Christmas Creek ~ 1570 - Mt Lewin Area ~ 300 - Mt Nicholas, Tongololo, Springo ~ 250 TOTAL 3,120 CENTRAL PILBARA - Flinders/White Knight ~150 - Solomon CID ~ 800 - Solomon Brockman ~150 - Solomon Marra Mamba
Slide 39: Expansion Map
& EXPANSION MAP — 200 mtpa Other Rail FMG Tenements Ore Processing Plant FMG Rail FMG Rail Ext
Slide 40: Expansion requirements
& 55 to 100 mtpa * Mining Inventory — Cloud Break and Christmas Creek * Berth allocation — 3 berths at AP * Approvals - Port stock yard < 12 months, Christmas Creek approvals 3 months « Infrastructure Mine Crush, Screen and Desand Rail, to Christmas Creek and trains Port, dredge, wharf and stock yar
Slide 41: Current Port Configuration
Current — 45 mtpa First Ore on Ship May 2008 aca - Co | 4 Berth 2 7 1 Ship loader 1 Lay-by berth 2.5mt stockpile | Single loop a | 1x 2car train || unloader 55 mtpa - 294 Load Berth - Lump circuit se a)
Slide 42: Expanded berths
eee 3 berths 5mt stockpile Double loop 2x 2 car train unloaders
Slide 43: 180Mt Anderson Point
We ye se iis Tee 180Mt Anderson Point |Cape sized vessels 07 038, 0420, COR
Slide 44: 200 mtpa Anderson Point
. 200 mtpa . Anderson Point (6 X Cape size + 1 X Panamax berths) O7 038, 0821, COR
Slide 45: Summary and Basis for Expansion Stages
Summary and Basis for Expansion Stages Optimum developments - Linear relationship $M/mtpa increase Expansion to 55 Straight forward, utilises latent capacity and introduces product enhancement 55-100 Optimum and shortest time expansion step in Chichester. Mines proven resources and maximises three b
Fortescue Metals Group — WAAPA Biennial Conference 2007 on 6ix